Labour Market Statistics, March 2021

Today’s figures, coming on the anniversary of the first lockdown, give us some welcome news that the labour market may be starting to recover.  PAYE employment has grown for three months in a row, regaining just over one fifth of the jobs lost in the crisis, and the unemployment rate may even have peaked (for now) at around 5%.  The Job Retention Scheme, and us all adapting better to this crisis, appears to have stopped any further deterioration in employment during the third lockdown.  The main risk now to future unemployment is the wind-down of the furlough scheme in October, and if we can stay on the roadmap out of lockdown then even this is unlikely to push unemployment significantly higher.

However if that is the good news – and it is good news – the bad news is that the improvement in the labour market is being driven by job protection rather than job creation.  New job starts remain very weak – stuck at one sixth below pre-crisis levels – while job exits are even lower (a quarter below pre-crisis).

This is particularly bad news for young people, who always lose out when hiring slows.  Young people now account for nearly two thirds of the fall in employment, while long-term youth unemployment appears to be rising strongly (up by two fifths in the last year).  Payrolled employment for people aged over 25, by contrast, is only around 1% below pre-crisis levels (although this measure excludes self-employment, which has fallen to its lowest in over a decade and appears to be affecting older workers in particular).

There are worrying signs too today that insecure work and ‘second choice jobs’ continue to rise, with the number of people in temporary work who want a permanent job up by around a quarter in the last year.  While we have clearly avoided an unemployment catastrophe, the risks of low pay, job insecurity and under-employment appear to be growing stronger each month.

Data on employment by sectors shows a similar picture to recent months, with jobs growth being driven by administrative and support services (likely including Test and Trace call centres and by contracted-out packaging and distribution) and in health.

Today’s briefing includes new analysis by sub-region, which lays bare the scale of the impact on London in particular, as well as on Aberdeenshire.  These areas have seen by far the biggest falls in employment and the weakest recoveries.  By contrast, more rural areas and those with higher shares of public sector employment have been relatively better insulated during the crisis.

Looking ahead, more action may well be needed in the coming months to get hiring going again if we do not see a strong recovery as the economy starts to reopen  In the meantime, it will be imperative that as much as possible of the £7 billion announced last year to support re-employment (through Kickstart, Restart and Jobcentre Plus services) is mobilised as quickly as possible, and as far as possible is targeted at those becoming long-term unemployed and otherwise disadvantaged in the labour market. In our view, this should include a meaningful jobs and training guarantee for long-term unemployed people and the extension of Kickstart beyond the end of this year.