Labour Market Statistics, January 2021
This briefing note sets out analysis of the Labour Market Statistics published this morning. The analysis mainly draws on Labour Force Survey data covering September to November 2020, supplemented by analysis of Pay As You Earn Real Time Information data, the ONS Vacancy Survey and administrative data from the benefits system on Universal Credit and Jobseeker’s Allowance.
Today’s figures suggest that the labour market had stopped deteriorating towards the end of last year and that the bottom may have been reached for the first part of the crisis. The figures are not as bad as some reporting today has suggested. However while the labour market appears to have stopped reversing, it could probably best be described as stuck in neutral – with very little sign of any sustained recovery.
The headline falls in employment and rises in unemployment mask a more stable picture in recent months – with employment levelling off towards the end of the year and unemployment growth appearing to be driven by an increase in the size of the labour force. Large rises in redundancies continue to reflect the impacts of the first lockdown, and we expect that these have now peaked and will start to fall from next month.
Looking at impacts by different groups, we see young people continuing to fare worse – but perhaps regaining some ground lost in more recent months and older workers starting to lose out more; and employment falling more for men than women. These different impacts likely primarily reflect occupational and sectoral factors – for example young people benefiting more from the easing of restrictions in the autumn, and women from increased public sector employment. We are also seeing some early signs of potential increases in job insecurity, with marked increases in involuntary temporary and part-time work in today’s data.
The second lockdown in November appears not to have led to any noticeable weakening in the labour market, but it has surely been a drag on the recovery – with signs that vacancies and hiring may have fallen back as restrictions were tightened.
As with last month, today’s figures could have been much worse. But they also are showing very little sign of recovery, and we know that the current third lockdown has led to increased temporary lay-offs, cuts in hours and falling vacancies. The signs are that we could be facing a prolonged period of weakness in the labour market, although we will likely see a strong bounce-back in the latter part of the year if we can suppress the virus and vaccines prove effective. In the meantime, a top priority for the coming Budget must be new measures to support new hiring, jobs growth and those most disadvantaged in the labour market.