January jobs figures: a strong start to the year, but those with health conditions are missing out (and it’s slow progress on ‘levelling up’)

Blog posts

21 Jan 2020

Tony Wilson, Institute Director

Follow @tonywilsonies

The first labour market statistics of the new decade have continued where the last ones left off: with record-breaking employment (76.3%) and unemployment at a forty-year low (3.8%).  On one level, these headlines were entirely predictable – as I noted last month, ONS uses a rolling three-month average for its estimates, and the single-month figure last month was stratospherically high.  This month’s single-month estimate has come back down to more normal levels, at just above 76%, but last month’s figure will continue to work its way through the headlines for this month and next, ensuring a couple of months of good news.

Nonetheless, even allowing for this, these remain really impressive figures given the significant domestic uncertainty in the labour market during the period covered (August to November 2019) and the backdrop of a slowing global economy. 

Particularly noteworthy has been a sharp fall in economic inactivity – the measure of those who are not looking for work or are not available for work (usually due to ill health, caring responsibilities or study).  Having barely budged in the last year, over the last quarter this has fallen to from 21.0% to 20.6% - its lowest figure on record.  This has been driven in particular by fewer people inactive due to study (down 53 thousand), caring responsibilities (down 56 thousand) and for ‘other’ reasons (down 43 thousand).  This likely reflects in large part the continued tightness of the jobs market – with more people being drawn into the labour force who were previously not looking for work.

However, those who are out of work due to long-term ill health are continuing to lose out in this labour market recovery – with economic inactivity for this group unchanged at 2.07 million even while it has fallen for virtually every other group.  As a consequence, the share of people who are economically inactive due to long-term ill health is now at its highest in more than a decade.  Despite the government’s welcome commitments to do more to support employment opportunity for disabled people and those with health conditions, if anything things appear to be getting worse.  As we said last month, this must surely now be the top employment priority for the new government.

The large increase in employment has also seen self-employment nudge above 5 million for the first time on record.  Self-employment is now up by over a million since 2010, accounting for more than one third of all employment growth.  As our research has shown before, the self-employed are a diverse group and a range of factors explain this growth.  But one factor has been an increase in low-income self-employment, and we will be publishing more research on this and the drivers of it in the coming months.

Finally, with the government increasingly focused on how it can narrow the gaps between our regions, it is worth noting that this month’s figures highlight once again just how far we have to go to make this a reality.  Despite employment rising by more than 350 thousand over the last year, it actually fell in five regions or nations – the North East, South West, Yorkshire and Humberside, and in both Scotland and Wales.  If you live in the North East, you are nearly one third more likely to be out of work than if you live in the South East.  Meanwhile since 2010, a quarter of all jobs growth has been in London and the rate of jobs growth has been twice as high there as in the rest of the country. 

‘Levelling up’ employment – so that every region had employment rates in line with our highest performers – would need another 1.4 million people in work.  This would be welcome ambition, but would require a step change across a range of policy areas – not least addressing inequalities in workforce skills, investment, connectivity and workforce health and wellbeing.  If the government is serious about reducing these gaps, then all of these areas will need to be priorities in the forthcoming spending review.

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.