Labour Market Statistics, November 2024
12 Nov 2024
Nick Litsardopoulos, Research Economist (Fellow)
The figures out today send a mixed message about the state of the UK labour market. The positives centre on the improvement in the economic inactivity rate, less good news is the rising unemployment rate to 4.3% and the employment rate falling back to 74.8%.
While the efforts of the ONS to improve the Labour Force Survey employment estimates are ongoing and several datasets appear to have gone through corrections, we need to continue to treat short-term changes with some caution.
Figure 1: Employment, unemployment and economic inactivity rates (%)
Source: Labour Force Survey. Vertical dotted line indicates start of first Covid-19 lockdown.
The improvement in the economic inactivity rate stems largely from improvements among 35-64 year olds, whereas the situation for younger people has worsened.
Worklessness, the combined numbers of unemployed and economically inactive people, continues to be a key issue affecting younger people aged 16-34, particularly for men. We find that worklessness has improved for those aged 34-64, but the increase for younger poeple is worrying. Even if we assume that people in the 16-24 group are inactive due to undertaking full-time studies, full-time study would be unlikely to explain the large increases in the 25-34 age-groups emerging from around 2020.
It is notable that the number of men and women who want a job but cannot find one has increased since 2021 by 8% for men and 5% for women. This is of particular interest when considering that reasons of economic inactivity have reduced in their overall effect in the worklessness figures such as looking after family, early retirement, or being temporarily sick.
Vacancies have continued to decrease, with the gap between claimant count and job vacancies widening further.
As noted in previous months (e.g., July, September, October) there were signs of a softening in the demand for jobs in the economy over the early summer that continued through autumn, and now in early winter, with weaker-than-expected vacancy figures. We have seen short-term unemployment edge down but appear to have now found a plateau at the lowest level we have seen in over a year. However, the vacancy figures have continued to be fairly poor. Today’s release sees a further quarterly fall that brought the number to an estimated 831 thousand from the previous 843 thousand – a new lowest level since April-June 2021. This suggests that equipping those who are looking for a job with the necessary skills to fill the available job openings is very important.
The number of vacancies remains subdued. Examining changes in the number of vacancies across industries over a 12-month period, we find that vacancies have continued to decrease for the vast majority of industries, with only two out of 22 industries (Construction and Finance) registering an increase. The available vacancies for some industries remain still lower than where they were before the pandemic (see chart below).
Figure 2: Vacancies by industry sector
It remains our view, that the government is right to prioritise employment growth as a key driver of a stronger economy, and improved living standards. The work to bring together employment and careers services and ensure good inter-relatedness with skills is crucial and we need this delivered with pace. The much-anticipated White Paper will contain a range of proposals and we need to move swiftly into finalisation to challenge these trends. The Youth Guarantee Trailblazers will need to lift a substantial load to make a difference to young people experiencing worklessness. Alongside combining employment and career support, there must be a focus on embedding good practice from the youth hub models previously seen.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.
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