Labour Market Statistics, July 2021
Today’s figures point to a continued strong recovery in the labour market. Vacancies were at their highest ever level in June 2021 (962 thousand), with a bounce-back in hiring in previously shut down sectors adding to a sustained recovery in hiring in the broader economy. The PAYE measure of employment also saw remarkably strong growth in June (up by 360 thousand), closing more than half of the outstanding ‘gap’ in employment and with young people particularly benefiting.
However, the LFS data was more subdued and suggests that we should take the PAYE figures with a small pinch of salt. In particular, the LFS suggests that employment overall was recovering less strongly through March-May – with self-employment still down by three quarters of a million on pre-crisis levels, continued large falls in part-time work and signs of a stagnating recovery for women in particular.
Nonetheless there do remain some grounds for cautious optimism, with the most recent single-month LFS estimates very strong (for May) and the real possibility that we’ll see LFS estimates start to grow more strongly in the coming months as they ‘catch up’ with other data.
Unemployment also remains above pre-crisis levels at 4.8%, but fell slightly on the quarter. We continue to believe that the unemployment rate may be at or close to its peak. Of far more concern however is continued strong growth in long-term unemployment, which is up by 70% over the last year – the highest rate of growth since the data series began in 1992, and now at its highest level since spring 2016 (at 560 thousand). Economic inactivity also remains elevated – up by over 400 thousand overall, and being driven in particular by strong growth in economically inactive students alongside continued very high levels of inactivity due to long-term ill health.
Looking ahead, with the numbers on furlough falling and vacancies rising, it is even clearer than in recent months that we need to refocus our effort on helping those who are out of work to get (back) into work, as well as working much better with employers to fill their vacancies. This means both delivering on the £7 billion investment in employment services that was committed in the Plan for Jobs, but also at the Spending Review going further on supporting those who are further from work including the longest-term unemployed and with long-term health conditions. At the same time, employers will increasingly need to ensure that they are designing and recruiting into jobs in ways that will enable groups like students, carers and older people to take them up.