Labour Market Statistics, September 2021

 | Institute for Employment Studies | Sep 2021

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This briefing note sets out analysis of the Labour Market Statistics published this morning. The labour market is continuing to recover strongly, with employment up on the quarter, unemployment down and vacancies above one million for the first time.  However this recovery disguises the fact that the overall labour market is over half a million smaller than when the crisis began – the largest contraction since the early 90s recession. Around two thirds of this is explained by higher ‘economic inactivity’ (driven by students, long-term ill health and family care) and one third by fewer foreign workers.  As a result, the lack of workers is now becoming a bigger challenge in the labour market than any lack of jobs.

The jobs recovery appears to be somewhat stronger for young people and those aged 50 to 64, partially reversing the larger falls for these groups during the crisis.  However the recovery appears to be weaker for women than men, with part-time work in particular not recovering to the same extent as full-time work.  At the same time though, the number of people in part-time work because they can’t find a full-time job remains above pre-crisis levels, as does the number in involuntary temporary work.  This suggests that even with labour shortages and high demand, many people in the labour force may not be getting the flexibility or job security that they need.

In more positive news, long-term unemployment appears to be levelling off, earlier than we had previously anticipated.  Redundancies are also now below pre-crisis levels and showing no signs of increase.  Looking at trends across sub-regions, it appears that London and Scotland are continuing to lag behind other areas in the recovery, likely driven by international travel and the offshore oil and gas industry.  The recovery otherwise appears to be broad based across areas, industries and jobs.

Looking ahead, as we have said in previous briefings, the top priority now needs to be to do more to support those outside the labour market to get (back) in – and in particular those with health conditions, parents and students.  This will require greater joining up between public services that reach these groups (including health, education and childcare); investment in more specialist support, particularly around occupational health and work; and more effective support to then prepare for and take up jobs.  Many employers too will also need to do more on job design, recruitment and in-work training than they may have been used to in the past.