Labour Market Statistics, January 2023

 | Institute for Employment Studies  | Jan 2023

cover image

This briefing note sets out analysis of the Labour Market Statistics published this morning. The analysis mainly draws on Labour Force Survey (LFS) data, which is the main household survey that collects official figures on employment, unemployment and economic inactivity and covers the period up to November 2022 (the most recent quarter being September to November 2022). The briefing also includes findings from the ONS Vacancy Survey, which collects employer data on open vacancies; and from the Monthly Wages and Salaries Survey, which collects pay data from businesses in order to estimate Average Weekly Earnings (AWE). The Vacancy Survey includes data up to December 2022, and the Wages and Salaries Survey to November 2022.

Today’s headline estimates of employment, unemployment and economic inactivity are all identical to those published last month. However underneath this we do see some signs of change in the labour market.In potentially positive news, economic inactivity due to long-term ill health, early retirement and studies appear to be falling slightly, although economic inactivity due to long-term ill health remains well above its pre-pandemic levels. Economic inactivity due to early retirement is now back to where it was before the pandemic, illustrating that the challenges that we are now facing are primarily around fewer people entering work rather than more people leaving it.

However in more worrying signs, redundancies continue to rise (albeit so far only back to pre-pandemic levels), unemployment of less than a year is rising, and the number of young people outside of full-time education or employment is also up. Vacancies continue to fall back. It is possible that for each of these we are simply seeing things returning more towards normal, but it is perhaps more likely that these are early signs of a wider slowdown.

We have also this month included new analysis of the work intentions of those who are economically inactive. Overall, 1.7 million people (around a fifth of all of those who are economically inactive) state that they would like a job at the moment, including 560 thousand of those with long-term health conditions. Additional analysis by IES and included in this briefing also finds that among those who do not want a job right now, there are more than 300 thousand people with long-term health conditions who state that they will definitely or probably work again in the future. Among those out of work due to caring responsibilities, 390 thousand want a job now while a further three quarters of a million expect to work again in future.

On pay, nominal wages continue to rise strongly (up by 6.7% on the year) but inflation continues to more than offset this, with real terms pay down by 2.4%.  And public sector pay continues to fare particularly poorly, rising again by less than 4%. This is undoubtedly contributing to the continued high vacancies in public services and to wider recruitment and retention challenges.

Overall, today’s labour market data paints a worrying picture, continued unmet demand for labour that is holding back growth and could be contributing to higher inflation, but also signs of a slowdown and potential weakening in the labour market in the coming months. The government’s review on workforce participation is therefore welcome, but needs to focus on ‘active’ labour market measures to improve support for those who are out of work and want a job as well as more ‘passive’ measures affecting the tax and benefits systems.

In particular, we need to do more to extend access to employment support through the services that people use, delivered in the ways that they want, and delivering the support that they need.  As we have said previously, in our view this should include as a minimum broadening access to the Restart Scheme and bringing forward commissioning of support through the Shared Prosperity Fund. We also need to work better with employers, and expect more from them – on making work more flexible and accessible, improving and simplifying recruitment, and providing greater security and support for those returning to work.

Looking further ahead, our new Commission on the Future of Employment Support, in partnership with abrdn Financial Fairness Trust, is looking to develop longer-term proposals for reform so that we can help more people to get the support they need to find decent, secure and rewarding work, and better help employers to fill their jobs. We are currently running a Call for Evidence until Monday 30 January seeking views on the current system and how it can be reformed for the future, as well as examples of what is working well and what we can learn from. Please do get in touch if you want to be involved, at and