Labour Market Statistics, February 2022

This briefing note sets out analysis of the Labour Market Statistics published on 15 February. 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 the ONS Vacancy Survey, which collects employer data on open vacancies. The LFS data covers the period October to December 2021; while the Vacancy Survey includes data up to January 2022.

In addition this month sees publication of quarterly data on labour market flows from the Longitudinal LFS, with analysis of this in the final section of the briefing.

Today’s headline figures are virtually identical to those published a month ago, and so remain disappointing overall – with employment growth levelling off and ‘economic inactivity’ remaining stubbornly high. Much of this is explained by fewer older people in work, with people aged over 50 accounting for four fifths of the total growth in economic inactivity since the pandemic began. All told, there are now 1.15 million fewer people in the labour force than we would have expected to see based on pre-crisis trends, with older people accounting for three fifths of this ‘participation gap’.

Worryingly, new data today on employment for disabled people also suggests that the employment ‘gap’ between disabled people and non-disabled people is widening, as unsurprisingly is the gap for people aged over 50. Those who were most disadvantaged in the labour market before the crisis, and particularly those with health conditions, appear to be faring worst in the recovery.

This month has also seen vacancies rise even higher than in recent months, with little sign that the emergence of the Omicron variant has dampened demand. As a result, there are now nearly as many vacancies as there are jobseekers – with the unemployment-to-vacancy ratio dipping to another fifty-year low.

New data on labour market flows  suggests that those those leaving work are increasingly doing so to inactivity rather than unemployment, which is consistent with more people leaving due to ill health or retirement as well as with people leaving the labour market entirely at the end of the Coronavirus Job Retention Scheme. Flows into work remain high, but have fallen back slightly for those exiting unemployment despite very high demand. Job-to-job moves meanwhile remain well above pre-crisis rates, although it is not clear yet how far this reflects pandemic-induced job changes or is start of a wider trend.

Looking ahead, today’s figures make it clearer than ever that we need new measures – from employers and government – that are focused on addressing the participation crisis that we are facing now rather than the unemployment crisis that we (thankfully) averted. The Budget next month will provide the ideal opportunity to do this.