Labour Market Analysis


	Making learning and work count Labour market LIVE from Learning and Work Institute 18 May 2021 Unemployment is 1,623,000, down by 52,000 from last month’s published figure (quarterly headline decreased by 121,000) and the unemployment rate at 4.8%, is down by 0.2 percentage points on last month and down by 0.3 percentage points on last quarter. The ONS figure for claimant unemployed is 2,629,000, down by 15,100 on last month, and the claimant rate is 7.2%. The number of workless young people (not in employment, full-time education or training) is 955,000, down by 35,000 on the quarter, representing 14.0% of the youth population (down by 0.6 percentage points). Youth unemployment (including students) is 536,000, and has fallen by 53,000 on the quarter. Vacancies in Feb-Apr 2021 rose (in the ONS official series) to 657,000 after recovering strongly from the low point of 341,000 in April to June 2020. There are now 2.6 unemployed people per vacancy. The employment rate is 75.2% (the same as last month’s published figure and has risen by 0.2 percentage points in the preferred quarterly measure). Learning and Work Institute comment The labour market figures published on 18 May suggest that the labour market has continued to improve with positive impacts felt from the April economic re-opening. Duncan Melville, Chief Economist at Learning and Work Institute, commented: ‘The headline labour market numbers from the Labour Force Survey (LFS) for the first three months of 2021 point to an improving labour market. Compared to the last three months of 2020, employment grew by 84,000, the first quarterly increase since the first three months of 2020, before the onset of the COVID-19 pandemic. Unemployment fell by 121,000 - the largest quarterly fall in six and a half years. Working age economic inactivity, however, rose in the quarter which was surprising as an improving labour market might have been expected to encourage people to start looking for work again. (Below I comment on this rise in inactivity in more detail.) Consistent with this improving labour market picture, the HMRC payroll data for March has been revised since last month and now shows an increase rather than a fall, and the claimant count and vacancy data for March released last month also point to improving labour market prospects. The monthly LFS employment numbers are frankly odd. Employment rose strongly in January and February by around 180,000 in each month and then fell by 217,000 in March, the opposite pattern to that which would be expected given the opening up of the economy in April. This is difficult to rationalise, stands in contrast with the data noted above and is perhaps down to the smaller survey sample sizes which underpin the monthly numbers, which increases the amount of noise as opposed to signal in this data. The data for April also point to an improving labour market. The official three-month vacancy data for February to April increased again and the monthly seasonally unadjusted numbers for April showed another dramatic increase pointing to a strong increase in labour demand. Similar patterns are also seen in the on-line job adverts data from Adzuna and the Indeed Job Postings data. The HMRC payroll numbers for April also showed a strong increase of 97,000 which is close to five times the average monthly increase seen in 2019 prior to the Pandemic. The claimant count fell for the second consecutive month in April. The rise in inactivity seen in the first three months of 2021 is potentially concerning so it warrants a deeper delve. Overall, compared to the last three months of 2020, working age economic inactivity rose by 48,000. The largest two factors behind this rising inactivity were being a student (up by 117,000) and retirement (up by 56,000) with some other categories falling, most notably those looking after their family or home (down by 74,000). There was also a notable increase in the economically inactive who did not want a job (up by 110,000). Again, this rise was largely driven by students and to a lesser extent retirement. This picture was supported by the age breakdown with inactivity rising amongst young people aged under 24 and amongst older people aged 50 and over but falling amongst those aged 25-49. The picture that emerges is a mixed one. The rise in inactivity from increasing numbers of students may in the longer term turn out to be a positive development if young people are acquiring greater skills which should provide a boost to future productivity levels. However, it is difficult to view the rise in retirement and economic inactivity amongst the over 50s as positive. One of the many costs of the pandemic would appear to be withdrawals from the labour market by older workers who might otherwise have continued to work.’ Paul Bivand, Associate Director for Statistics and Analysis at Learning and Work said: 'Many of the figures announced by the Office for National Statistics this morning are likely to be revised over the summer. They announced yesterday (17th May 2021) that they will be revising the Labour Force Survey weighting using the assistance of the HMRC employee data to give greater confidence, particularly, to the estimates of numbers of migrants. The current system is to calculate estimates totalling to population projections calculated before the pandemic. If migrants have subsequently left, this produces implausible rises in the UK-born population. Further revisions will occur when Census returns have been processed.' Employment is up by 84,000 between October to December 2020 and January to March 2021. In the last 12 months employment is down by 529,000. Unemployment is down by 121,000 between October to December 2020 and January to March 2021. and the unemployment rate decreased by 0.3 percentage points to 4.8%. Economic inactivity rose by 48,000 between October to December 2020 and January to March 2021, and the inactivity rate rose by 0.1 percentage points to 21.0% in the quarter. The national claimant count decreased by 15,100. Youth unemployment decreased by 53,000. There are 536,000 unemployed young people, and 370,000 (5.4% of the youth population) who are unemployed and not in full-time education. Self-employment is down by 617,000 this year. The number of employees is up by 142,000 over the year. Involuntary part-time employment is 1.0 million, 13.1% of all part-time workers. The highest proportion since 2016.
	Chart 1: UK unemployment (ILO) The latest unemployment rate has fallen by 0.3 percentage points to 4.8%.
	Chart 2: The claimant count and UK unemployment compared The number of unemployed people who are claiming unemployment-related benefits is now 1,005,800 higher than the number of unemployed in the official measure.
	Chart 3: Youth unemployment The number of unemployed young people fell by 39,000 since last month’s figures, to 536,000. Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants is down by last month by just 7,300, to 502,900.
	Chart 4: Young people not in employment, full-time education or training The number of out of work young people who are not in full-time education (955,000) fell by 44,000 in the last quarter , or 4.4%. The fall was largely among the unemployed, with the number of inactive young people not in full-time education or training falling more slowly.
	Chart 5: Youth long-term unemployment (six months and over, 16-24) Youth long-term unemployment (which can include students) has risen by 16,000 over the last quarter (while falling 8,000 in the last month) and is now 212,000.
	Chart 6: Adult long-term unemployment (12 months and over, 25+) Adult long-term unemployment on the survey measure is now 272,000. Those who lost their jobs with the first lockdown are not yet in these Jan-March figures, though by now (May) they will have passed the 12-month threshold. The fall in long-term unemployment numbers in the first lockdown period of 2020 (April to June 2020) could be due to long-term unemployed people stopping looking for work at that time. Later, they then resumed looking for work and may have counted their unemployment from when they lost their job, missing out the lockdown period - if so they would have come back into the figures.
	Chart 7: Unemployment rates by age The 18 to 24 year old unemployment rate (including students) is 12.0% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.5%. For those aged 50 and over it is 3.7%. The quarterly change is down 1.4 percentage points for 18 to 24 year olds, down 0.3 percentage points for 25 to 49 year olds, and down 0.1 percentage points for the over-50s.
	Chart 8: Unemployment rate changes by age (counting February 2020 as 100) The 18 to 24 year old unemployment rate (including students) is 1.5 percentage points higher than in February 2020. The change for those aged 25 to 34 is 0.8. The change for those aged 35 to 49 is 0.7. The change for those aged 50 to 64 is 1.0 The change for those aged over 65 is 0.0. Chart 9: Vacancies – whole economy survey Headline vacancies this month rose by 36,000 to 657,000. The ONS' experimental single-month vacancy figures is up by 170,000 In the last quarter. The headline ONS vacancy figure is both seasonally adjusted and a three-month average. The chart shows both series.
	Chart 10: Experimental single month vacancies – whole economy survey The Office for National Statistics experimental single month vacancy estimates include sectoral information. As these are not seasonally adjusted, it is better to look at annual changes. The numbers are thousands of vacancies, under each number, and on the right, the annual change in thousands of vacancies. The changes here are April 2021 on April 2020, so is comparing vacancies with the first lockdown.
	Chart 11: Unemployed people per vacancy There are 2.6 unemployed people per vacancy. This has fallen back as the number of vacancies has risen, despite high numbers of unemployed.
	Chart 13: Online vacancies to early March from Adzuna Job vacancies dropped to below half of the 2019 average following lockdown. ONS analysis suggests that it was this reduced hiring that led to falls in employment, rather than increased job loss. Vacancy numbers in this measure are now above the February 2020 level, but still have some way to go to match 2018 - vacancies were softer in 2019 than in 2018 on this measure.
	Chart 14: UK employment Employment is up by 46,000 on the figure published last month, to 32,476,000. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be upwards.
	Chart 15: Employment rate in the UK The employment rate is up by 0.2 percentage points over the quarter, to 75.2%. The chart shows both the official figures and the experimental weekly figures. The trend is likely to be upwards.
	Chart 16: Economic inactivity – the long-term sick or disabled The numbers of people who are economically inactive, that is, not working and not currently looking for work, who are long-term sick or disabled has been trending upwards. This month, there is a rise after last month's sharp fall.
	Chart 17: Economic inactivity – people looking after family The survey figures showing those looking after family and not doing paid work or looking for paid work have been trending downwards.
	Chart 18: Economic inactivity – other inactive In the Coronavirus period, people who were not working or looking for work due to Covid were included in this group. The number in this category increased sharply at the time, and has continued at a high level. A very high proportion of this group want to work, and this increased over the period of the pandemic.
	Chart 19: Employment rate annual change in regions – January to March 2021 This quarter, one region showed a rise in the employment rate, the East of England, while two regions, Wales and Yorkshire and the Humber, showed no change over the year from January to March 2020. The employment rate fell in the remaining nine regions, with the largest falls in the East Midlands and Northern Ireland.
	Chart 20: Unemployment rate annual change in regions – January to March 2021 This quarter, eleven out of twelve regions showed a rise in the unemployment rate, led by London and Wales. The unemployment rate showed no change over the year in the North East.
	Chart 21: Inactivity rate annual change in regions – January to March 2021 This quarter, eight regions showed a rise in the inactivity rate, led by Northern Ireland and the East Midlands. The inactivity rate fell in three regions, led by Wales and Yorkshire and the Humber. -->
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