• Unemployment is 1,550,000, down by 50,000 from last month’s published figure (quarterly headline fell by 86,000) and the unemployment rate is 4.6%, down by 0.2 percentage points on last month and is down by 0.3 percentage points on last quarter.
• The ONS figure for claimant unemployed is 2,193,300, down by 58,600 on last month, and the claimant rate is 5.4%.
• The number of workless young people (not in employment, full-time education or training) is 851,000, and fell by 80,000 on the quarter, representing 12.5% of the youth population (down by 1.2 percentage points).
• Youth unemployment (including students) is 525,000, down by 10,000 on the quarter.
• Vacancies in June to August 2021 rose (in the ONS official series) to 1,034,000 after recovering strongly from the low point of 340,000 in April to June 2020.
• There are now 1.6 unemployed people per vacancy.
• The employment rate is 75.2% (rose by 0.1 percentage points on last month’s published figure and rose by 0.5 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 14 September indicate a strongly recovering labour market. However, employment levels remain well below those seen pre-pandemic and the outlook between now and the end of 2021 remains highly uncertain given the Coronavirus Job Retention Scheme ends this month.

Duncan Melville, Chief Economist at the Learning and Work Institute, commented:

‘Employment is growing strongly. Today’s headline numbers from the Labour Force Survey (LFS) show an increase in employment of 183,000 in the three months to May to July 2021. This is the largest quarterly increase since November 2019 to January 2020 before the onset of the pandemic. New data on workforce jobs shows an increase in the three months to June 2021 of 293,000 - the largest quarterly increase for over seven years. The more timely HMRC payroll numbers show an increase of 241,000 in the month to August - the largest increase on record. Vigorous employment growth can be expected to continue as vacancies exceeded a million for the first time in June to August, and data on job ads from Adzuna indicate that vacancy levels continued to remain strong into this month.

Alongside this picture of robust demand for labour, both unemployment and inactivity amongst people of working age have fallen substantially: down by 86,000 and 121,000 in the three months to May to July 2021 respectively. It is particularly welcome that the improving labour market is encouraging people back into the labour market to find work.

While the above is all very encouraging, we should not forget that employment remains substantially lower than it was pre-pandemic. Admittedly, HMRC employee payroll numbers are back at pre-pandemic levels, but on the wider LFS and workforce jobs measures employment is down by over 700,000 and 800,000 respectively since the start of the pandemic. Full recovery in the labour market is unlikely to be seen for at least a couple of years and will require supportive action on the part of government: both in terms of labour market policy to help individuals move back into work and wider macroeconomic policy to ensure that the economy continues to grow.

The immediate outlook for the labour market also remains highly uncertain due to the ending of the Coronavirus Job Retention Scheme this month. The latest data showed that there were nearly 1.6 million furloughed workers at the end of July. Based on more recent survey data, the number of people on the scheme could still be around a million when it closes. Many of these are likely to return to their existing jobs, perhaps on reduced hours, but inevitably, despite the strong labour market environment, some will lose their jobs. Of these some may leave the labour market, for example, some older workers may retire. Even so some rise in unemployment seems highly likely. The magnitude of this rise is highly uncertain, but some simple calculations suggest it could be in the range 130,000 to 280,000.

Whatever happens to overall unemployment, long term unemployment has already risen substantially. The number of young people aged 16-24 who have been unemployed for six months or more is a third higher than it was pre-pandemic, and the number of people aged 25 and over who have been unemployed for 12 months or more is up by nearly a half since the start of the pandemic. The Spending Review next month will need to ensure that the necessary support is available to help individuals move into sustained employment. ’

Paul Bivand, Associate Director for Statistics and Analysis at Learning and Work Institute said:

"The headlines today are based on HMRC's 'flash' estimate of payrolled employees in August. The figures will be revised (normally downwards) because HMRC include some expected employer returns that have not yet arrived. The rise of 240,000 in HMRC employment is the net change of 855,000 job starts and 613,000 people leaving a job. Job churn is very high, even if these figures may be revised down."

Employment rose by 183,000 between February to April 2021 and May to July 2021. In the last 12 months employment is down by 202,000.

Unemployment reduced by 86,000 between February to April 2021 and May to July 2021 and the unemployment rate fell by 0.3 percentage points to 4.6% in the quarter. In the last 12 months unemployment has risen 81,000.

Economic inactivity decreased by 121,000 between February to April 2021 and May to July 2021 and the inactivity rate decreased by 0.3 percentage points to 21.1% in the quarter. In the last 12 months inactivity has risen 75,000.

The national claimant count has fallen by 58,600.

Youth unemployment is down by 10,000 in the quarter. There are 525,000 unemployed young people, and 317,000 (4.7% of the youth population) who are unemployed and not in full-time education.

Self-employment decreased by 336,000 this year. The number of employees increased by 159,000 over the year. Involuntary part-time employment is down by 50,000 this quarter to 980,000, 12.6% of all part-time workers. Involuntary temporary employment is up by 15,000 this quarter to 526,000, 32.1% of all temporary workers.

This newsletter is produced by Learning and Work Institute and keeps readers up to date on a wide range of learning and work issues.

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