Labour Market Statistics, January 2022
The attached briefing note sets out analysis of the Labour Market Statistics published this morning, mainly covering the period September-November 2021 (but with Vacancy Survey data including December 2021). In addition this month, we have included an Annex to the briefing that sets out the differences between LFS estimates of employment and those reported through the monthly ‘Pay As You Earn Real Time Information’ data.
Today’s figures are very disappointing overall – with employment growth appearing to have stalled, and falling unemployment offset by further rises in ‘economic inactivity’ (the measure of those not looking and/ or not available for work). Employment remains 600 thousand below pre-pandemic levels while economic inactivity is 400 thousand higher.
This growth in inactivity is increasingly being driven by higher worklessness due to ill health, which is up around 200 thousand in the last six months (and by 230 thousand since the pandemic began). It is also rising for young people outside full time education, and falls in labour force participation have been particularly large for older people. In all there are now 1.1 million fewer people in the labour force than we would have expected based on pre-crisis trends, and older people account for three fifths of this ‘participation gap’.
This flatlining employment is happening despite continued record levels of vacancies, which do not appear to have been affected much at all either by the end of furlough or the Omicron outbreak. Vacancies are up across all industries, and further falls in unemployment mean that there are now just 1.1 unemployed people per vacancy – comfortably (yet again) the tightest labour market in at least fifty years.
These problems in the labour market have been evident (and reported on) for at least six months now and our continued failure to take steps to address them is holding back our recovery from the pandemic. It is particularly pressing given the costs of living crisis, which will hit those out of work particularly hard. The Plan for Jobs has averted an unemployment catastrophe, but we need a new ‘Plan for Participation’ that can mobilise government, employers and those services that work with people who are out of work, to help those who can work and who may want to work to get back in.
Finally, in the Annex to the briefing we set our concerns around the continued reliance on PAYE Real Time Information data as the leading indicator of the state of the labour market. This experimental statistic only gives a partial view of total employment, tells us nothing about those out of work, and the more timely ‘flash’ estimates are subject to wild revision (with the monthly flash estimates during 2021 alone being revised down by on average 110 thousand). We would therefore urge users to take the PAYE data with a large pinch of salt, and would urge government and the ONS to lead with the (official) Labour Force Survey estimates.