Labour Market Statistics, September 2024

Today’s figures are a mixed bag and a confusing picture. Increased volatility in the main Labour Force Survey, combined with divergent trends between the LFS and other measures out today (for Workforce Jobs and payrolled employees) mean it is even harder than usual to draw conclusions on what is going on in the labour market. What we can say for sure is that all three sources are pointing towards either little or no growth in the number of people employed, even if Workforce Jobs and payroll data suggests that employment had been growing fairly steadily over the last couple of years. We also know that the LFS is under-stating the number of people in work (and the number out of work) because it is using out-of-date population estimates – however this is not enough to explain the gap with other data sources. In the first part of today’s briefing we try to explain these issues in a bit more detail than usual.

We also know that even if employment levels may have grown over recent years, this has been driven by population growth – with the employment rate still well below where it was before the pandemic began and the proportion of people out of work much higher. The figures out today, as well as those last month when we did not publish a monthly briefing, have shown a significant improvement on the very weak data that we saw earlier in the year, with employment rising to 74.8%, unemployment down to 4.1% and economic inactivity at 21.9%. However, the volatility in employment estimates means that we need to treat short-term changes with some caution.

Nonetheless, there are still a number of more worrying signs in the more detailed data on worklessness for different groups. In particular, we have seen significant increases in the number of people out of work who are aged under 35, with an unwelcome increase in the proportion of young people not in full-time education nor in the labour force – which is now back to the highest it has been since comparable records began in the early 1990s. We have also seen an increase over the last year in the number of women out of work with caring responsibilities and more men off work with long-term health conditions.

Looking at the wider economy, vacancies continue to edge down – reaching their lowest in three years – driven in particular by fewer jobs in lower paying service industries and in health and care. However there remain around 860 thousand unfilled jobs, and earnings growth remains strong too – at 5% year on year, and likely to remain above inflation at least through the autumn. So we can clearly do more to help people who are out of work get back to work and to help employers fill their jobs.

In our view then, the government is right to prioritise 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 doing this, and we will be publishing next week the final report from our Commission on the Future of Employment Support, in partnership with the abrdn Financial Fairness Trust which will set out proposals for reform over the coming Parliament.

In the short term though, government also needs to move quickly at the autumn Budget to address the cliff-edges in funding over the next few months months – with the Work Health Programme and UK Shared Prosperity Fund both due to end, and the Universal Support programme not yet ready to start rolling out. At a minimum, government needs to commit at the Budget to extendng existing provision and to rolling out Universal Support as soon as possible, but there is a case for going further too to address gaps and meet needs while longer-term changes are put in place.