October Labour Market Statistics: comment from the Institute for Employment Studies
16 Oct 2024
The figures out this month, as with those of the past couple of months, show improvement on the very weak data that we saw earlier in the year, with employment rising to 75% from 74.8%, unemployment down to 4.0% from 4.1% and economic inactivity at 21.8% from 21.9% previously.
Employment and economic inactivity remain worse than before the pandemic although the volatility in the Labour Force Survey (LFS) employment estimates means we must treat short-term changes with caution: the LFS is under-stating the number of people in work (and the number out of work) due to using out-of-date population estimates.
Figure 1: Employment, unemployment and economic inactivity rates (%)Source: Labour Force Survey. Vertical dotted line indicates start of first Covid-19 lockdown.
While rates of employment, unemployment and economic inactivity are back to where they were a year ago, underlying this is variance by age and gender.
Worklessness is up significantly for people aged under 35, while it is falling for people aged 35-64.
This month’s data registers a small decrease in both the number of unemployed and inactive young people aged 16-24, but too little to reverse the trends. Youth inactivity has edged lower (to 10.7% from 10.8%), as has youth unemployment (now 5.4% from 5.5%).
Trends continue for women to be more out-of-work than men but growth in worklessness in the last year has mainly affected men. Reasons for economic inactivity vary substantially between men and women. There has been a fall in the number of women who are economically inactive due to long-term illness, in contrast to an increase among men. There has also been a fall in the number of women who are economically inactive due to not wanting a job or other reasons that includes caring responsibilities.
Vacancies have continued to decrease, with the gap between claimant count and job vacancies widening in the past year.
In July and September we found signs of a softening in the demand for jobs with weaker-than-expected vacancy figures. We have also seen short-term unemployment edge down and appear to plateau at the lowest level seen in over a year. However, the vacancy figures have continued to be fairly poor. Yesterday’s release saw a further quarterly fall that brought the number to 843 thousand – a new low since April-June 2021. This suggests that equipping people who are looking for a job with the skills to fill the available job openings is very important. In our view, it confirms the government’s prioritisation of employment growth as a key driver of a stronger economy, more stable public finances and improved living standards. Extending access to high-quality employment support has a key role to play in achieve this.
Pay growth remains weak, with ‘real’ pay pausing at 2%.
Yesterday’s pay figures suggest that pay growth has slowed. Both regular pay (excluding bonuses and arrears) and real pay appear to be flat after their recent rise, with real pay growth hovering around 2%. This is well below the heady peaks of 8% growth that we saw a year ago, but as the ONS note those figures were aided by large public sector pay settlements and yesterday’s figures are the weaker for being compared with them.
Note: This LFS data reported in this analysis covers the period to Jun-Aug 2024. The LFS data was reweighted in February and the new weights are only available from autumn 2022 onwards.