Labour Market Statistics, December 2021
This briefing note sets out analysis of the Labour Market Statistics published this morning. The analysis draws on Labour Force Survey (LFS) data, which is the main household survey that collects official figures on employment, unemployment and economic inactivity and where the most recent data covers the period August to October 2021. This is the first LFS data to cover the period after the end of the Coronavirus Job retention Scheme on 30 September 2021. The briefing also includes analysis from the ONS Vacancy Survey, which collects employer data on open vacancies and includes data up to November 2021.
Today’s figures see a sharp fall in unemployment and a continued rise in employment. However, surprisingly, economic inactivity has also ticked up this quarter and remains 400 thousand higher than pre-crisis. Combined with a slightly smaller population, this means that there are now one million fewer people in the labour market than would have been expected on pre-crisis trends, with more than half of this gap now explained by fewer older people in the labour force.
This participation gap appears to be edging up, even though vacancies are continuing to set new records – at 1.2 million, there are twice as many job openings as this time last year and 50% more than immediately before the crisis. These jobs are being created across all industries, and firms’ inability to fill them is continuing to hold back growth.
Higher economic inactivity is, as with recent months, being driven by ill health and early retirement. Inactivity for these reasons is up by 165 thousand since the third lockdown, compared with a fall of 255 thousand for all other reasons (including studies and caring). Overall there are now 2.5 million people out of work due to ill health, the highest figure since 2005; with worrying signs that economic inactivity for young people not in education is also rising sharply.
More positively, long-term unemployment appears to have levelled off and is falling for young people, while the end of the furlough scheme has not led to any increase in redundancies. The Plan for Jobs (and its delivery) has been a success, and should give us some hope that with similar effort we can also be successful in raising participation and supporting those further from work.
Looking ahead, rising Covid-19 cases means that it is looking increasingly likely that we will need tighter restrictions in the new year which in turn may take the wind out of (or even reverse) the improving picture on the labour market. If this happens then the government will need to be ready with temporary support to protect jobs and incomes. However we will enter the new year with nearly half a million more people out of work than there were before the crisis, so any new Plan for Jobs needs to be matched with a Plan for Participation, to help those already out of work with the support that they need to get (back) in – particularly for people with health conditions, older people, parents and disadvantaged young people.