February Labour Market Update

There were cautiously optimistic signs in the latest ONS figures release this week, with the second monthly increase in the number of people in payrolled employment in the UK. This echoes Gi Group’s experience with several of our key sectors seeing positive growth as they provide vital services to the UK in these unusual market conditions.

Commenting on the data, Gi Group UK’s CEO, Paulo Canoa said “With this week also seeing the roadmap for leaving lockdown outlined by the Prime Minister, we will see businesses adapting plans and hopefully starting to reinvest as they begin to get a clearer picture of future trading conditions. However, while we now have an indication of the timeline for the return to ‘normal’, next week’s budget may be more revealing to many sectors – as it is important to understand government plans around support for business in what is still a period of challenging conditions and severe uncertainty.

The ongoing approach to furlough – currently scheduled to end in April – will be key. If ended sharply, that would inevitably see the numbers of redundancies increase. While it was encouraging to see the number of people in payrolled employment increasing, that figure is still a long way off from pre-pandemic levels. Further green shoots did come, however, in the form of 599,000 vacancies in the UK in November 2020 to January 2021 which, while 211,000 fewer than a year ago, is some 64,000 higher than estimated in the previous quarter.”

A summary of the latest data can be found below along with the ONS website https://www.ons.gov.uk/employmentandlabourmarket

Since February 2020, the number of payroll employees has fallen by 726,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic, with the latest two months recording small increases. New analysis by age band shows that the 18 to 24 years age group has seen the greatest decrease in payrolled employees since February 2020.

Data from our Labour Force Survey (LFS) shows the unemployment rate continued to increase, while the employment rate continued to fall. Although total hours worked continued to increase from the low levels in the previous quarter, this increase slowed in the latest quarter. The number of people temporarily away from work has fallen since its peak in April and May 2020, although it has increased slightly in November and December. The number of people away from work because of the pandemic and receiving no pay has also fallen since the start of the pandemic but risen slightly over the last two months.

The number of job vacancies in November 2020 to January 2021 was 26% lower than a year ago. This is an improvement on the position in summer 2020 when vacancies were down by nearly 60% year on year, but the rate of improvement has slowed in the past few months. Further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry.

Annual growth in average employee pay continued to strengthen; the growth is driven in part by compositional effects of a fall in the number and proportion of lower-paid employee jobs, and by increased bonuses, which had been postponed earlier in the year.

• In January 2021, 83,000 more people were in payrolled employment when compared with December 2020; this is the second consecutive monthly increase.
• In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020.
• The UK employment rate, in the three months to December 2020, was estimated at 75.0%, 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.
• The UK unemployment rate, in the three months to December 2020, was estimated at 5.1%, 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.
• The redundancy rate, in the three months to December 2020, was estimated at 12.3 people per thousand employees.
• The Claimant Count increased in January 2021, to 2.6 million; this includes both those working with low income or hours, and those who are not working.
• There were an estimated 599,000 vacancies in the UK in November 2020 to January 2021; this is 211,000 fewer than a year ago and 64,000 more than the previous quarter.
• Growth in average total pay (including bonuses) among employees for the three months October to December 2020 increased to 4.7%, and growth in regular pay (excluding bonuses) also increased to 4.1%.