Labour Market Statistics, April 2023

Today’s figures show continued improvement in the labour market – with employment up, economic inactivity down and unemployment broadly flat. Employment is almost back to where it was around this time last year, although it remains around 0.8 percentage points lower – and economic inactivity 0.9 points higher – than on the eve of the pandemic.

Today’s pay data is broadly in line with (slightly better than) figures for last month, with annual pay growth at around 7%. This remains very high by historic standards, but not enough to offset stubbornly high inflation. There is significant uncertainty on both pay and inflation in the coming months, but if inflation falls faster than pay (which is plausible) then we may start to see real pay recover later in the year.

Worryingly however, lower economic inactivity is still masking very large rises in the number of people out of work due to long-term ill health – which has hit a new record, at 2.53 million – and more young people neither in full-time education nor employment (which is back above one million). Long-term unemployment may also be starting to tick up again.

Today’s briefing also includes analysis of changes in part-time, full-time, employee and self-employed work for men and women, and illustrates that recent improvements in employment are being driven by a recovery in employment for men, particularly in part-time work and self-employment. Interestingly, the number of people in part-time work because they cannot find a full-time job is falling (as is the number in temporary work because of a lack of permanent jobs).

All told then, today’s figures are broadly positive but still suggest that many of those who are most disadvantaged in the labour market are struggling the most to get into work even as the economy continues to create jobs. This in turn is holding back growth and contributing to the UK’s very weak recovery compared with other major economies. While the Budget announcements last month were broadly welcome in trying to address this, it is unlikely that those measures alone will be enough to meet the scale of these challenges. In particular, we need to do far more and better to reach people who are out of work and disadvantaged irrespective of the benefits that they claim, and to provider more specialised employment support.

Our Commission on the Future of Employment Support, in partnership with abrdn Financial Fairness Trust, will be developing proposals for longer-term reform to help address these issues. We will be publishing next week a summary of the key findings from our call for evidence, to which around a hundred organisations and individuals responded with a range of evidence and proposals for reform.

Employers also have a key role to play, both in helping people to stay in work and enabling more people who are out of work to get return. Our annual conference next week will be exploring these issues in more depth, with more details here.