Labour Market Statistics, May 2023

Another month, another record set for the number of people out of work due to long-term health conditions. At 2.55 million people, the number off work due to ill health has risen by 440 thousand since the start of the pandemic and by 85 thousand in the last quarter alone. At the same time, economic inactivity for every other reason is now falling – with particularly large falls in student numbers and those off for ‘other’ reasons.

This means that despite rises in long-term ill health, economic inactivity overall is down on the quarter and on the year; with this translating into rises in both employment and unemployment (as those previously economically inactive start to look for work).

Vacancies are also down on the quarter, but remain above a million and may start to level off in the next month or two. Vacancies remain strongest in public services, professional services and administrative roles but have fallen further in hospitality and retail. This may point to fewer ‘entry level’ roles for those (re)joining the labour market, and potential risks around mismatches in people’s skills or where they live.

Earnings growth remains strong, at around 7%, with pay growth high in both the public and private sectors. Continued high inflation, however, means that real pay growth remains negative. We may see that change in the next few months if inflation falls back to the extent that some analysts are predicting.

Overall, our view is that today’s figures show that labour demand is continuing to hold up. However, with higher worklessness due to long-term ill health, rising long-term unemployment and widening employment ‘gaps’ for disabled people, older people and young people outside of full-time education, it is hard to escape the conclusion that those who are more disadvantaged in the labour market are being increasingly left behind. This in turn is holding back our economic recovery and undermining living standards.

We can and must do more to address this.