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All change! Over TWO MILLION people started a new job this summer, still not enough to ease growing labour shortages

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UK still grappling with a “participation gap” of nearly one million workers, more than half a million aged over 50 – we’re doing “nowhere near enough to help people get back into work, particularly older workers, disabled people and parents”

This morning’s Labour Market Statistics show that record numbers of people started new jobs between July and September this year, as Covid restrictions fully eased and furlough started to unwind. 

In all 1.2 million people moved into work from being out of work (including nearly two fifths of all of those who were unemployed in the spring – another record), while 980 thousand people changed jobs. 

Overall, this means that 2.2 million people started a new job between July and September – or 7% of all of those in work, comfortably the highest ever.

In data going back to 2001, we have never seen a figure higher than 6.5%. 

However despite these record movements into work, the number of vacancies has continued to rise (now reaching 1.2 million) and the number of unemployed people per vacancy has fallen even further, to just 1.3 people. 

This is the key measure used in assessing the balance between labour demand and labour supply (or how ‘tight’ or ‘loose’ a labour market is), and is now at comfortably its lowest since at least 1971. 

At the height of the crisis (April-June 2020) there were 4.1 unemployed people per vacancy.

As set out last month, The Institute for Employment Studies (IES) analysis suggests that this recruitment crisis is being driven by huge falls in labour market participation, mainly explained by more older people leaving work and fewer younger people entering from education (with lower migration explaining between a quarter and a third of the falls).

Overall IES estimate that there is a “participation gap” of 950 thousand, between the number of people in the labour market now and what would have been expected based on pre-crisis trends. 

Just over half a million of this is explained by older people, and particularly older women (300 thousand). 

Tony Wilson 100x100

Commenting on the figures, IES Director Tony Wilson said:

“We’ve never seen jobs being filled at a faster rate than now, with three quarters of a million people starting a new job every month since Covid restrictions were eased.  Yet despite this we’re seeing labour shortages across all parts of the economy and a tighter jobs market than at any time in at least fifty years. 

“All told, we’ve nearly a million workers now missing from the labour market, and their absence is now holding back our recovery and adding to inflation.  There’s little sign in today’s data that these problems are being driven by furlough or even Brexit. 

“Instead they’re mainly being caused by older people who lost their jobs not going back to work as well as by more young people staying in education.  These problems aren’t going to fix themselves in the near future, and we’re still doing nowhere near enough to help get people back into work, particularly for older workers, disabled people and parents.”

Mims Davies 100x100

Minister for Employment Mims Davies MP said:

“With over 100,000 young people landing roles through the Kickstart scheme, more people on payrolls this quarter in all corners of the country, and unemployment continuing to fall, it is clear our Plan for Jobs is working.

“From Ashford to Aberdeen, our brilliant DWP Work Coaches are matching jobseekers to local vacancies in growing sectors and supporting people – at any age and any career stage – to seize that next opportunity, get into work and progress.”

Rishi Sunak 100x100

Rishi Sunak, Chancellor of the Exchequer, said:

“Today’s numbers are testament to the extraordinary success of the furlough scheme and welcome evidence that our Plan for Jobs has worked. 

“We know how vital keeping people in good jobs is, both for them and for our economy – which is why it’s fantastic to see the unemployment rate falling for 9 months in a row and record numbers of people moving into employment.

“Our Plan for Jobs is at the heart of our vision for a stronger economy for the British people, with schemes like Kickstart and Sector Based Work Academies continuing to create opportunities for people up and down the country.”

Neil Carberry100x100

Neil Carberry, Chief Executive of the REC, said:

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“This latest data shows the labour market showing remarkable stability even as Furlough came to an end. Vacancy numbers reached another new record high, and recruiters have been working hard to get people into jobs – but there are shortages in sectors across the economy, making their task harder than ever. Our own data shows employers have been raising starting salaries at record pace to try and attract the best candidates.

“But this sugar rush will not last forever, and we can already see the pace of growth starting to slow. It’s important that government put measures in place that will help companies to invest and keep the economy growing. Despite the record vacancies we need to keep an eye on tackling unemployment and inactivity. This will be best achieved through collaboration between business and government, with a joined-up effort that will deliver a revolution in training for work and help meet the needs of the economy.”

Naomi Clayton 100x100

Naomi Clayton, Acting Director for Policy and Research at Learning and Work Institute, said:

“The labour market continues to recover strongly, with record moves into employment in summer. Early signs also suggest that the furlough scheme worked to protect millions of jobs with a relatively small share of redundancies. However, long term unemployment is up almost 50% and economic inactivity remains stubbornly high.

“Our analysis suggests there are 900,000 fewer potential workers in the UK than if pre-pandemic trends had continued. So while employers struggle to fill a record 1.3 million jobs, 3.2 million people are either unemployed or want to work. The extension to several Plan for Jobs schemes is welcome, but support needs to go much further to match more people, including those not on Universal Credit, to the available jobs.”

Steve Haines 100x100

Steve Haines, Director of Public Affairs at youth charity Impetus is urging the Government to support young people into work to tackle the new record number of vacancies:    

“The youth unemployment rate has dropped back to pre-pandemic levels and has done so in spite of the furlough scheme ending. Yet job vacancies have risen to a new record of nearly 1.2m – we need to work harder to reduce the number of young people neither earning nor learning.

“The fact is that a significant proportion of unemployed young people simply aren’t work ready. They need support before they have the skills and confidence required to enter the world of work. This has been the case for over 20 years, during which at least one in eight 18-24-year-olds have always been out of full-time education, employment or training.

“Now is the time to invest in levelling up young people with proven evidence-based interventions. If the Government is serious about reducing the number of vacancies, they must address young people’s essential skills in the levelling up white paper due before Christmas.”

Also responding to the announcement that the Kickstart Scheme has helped over 100,000 young people into employment, Steve Haines, said:

“While it’s clear Kickstart has helped many young people, when it was first announced in July 2020, the Chancellor stated that the aim of the £2 billion scheme was “to create hundreds of thousands of new, fully subsidised jobs for young people across the country”.

“Kickstart is still some way off realising the ambition laid out for it, and today we learned we have a record high number of job vacancies, yet in just six weeks the Government is due to wind up its flagship youth employment programme. We must see a plan for helping young people furthest from the labour market into work in the levelling up white paper due before Christmas.”

Walid Koudmani, market analyst at financial brokerage XTB comments:

“Today’s positive unemployment figures continue the recent trend which has seen unemployment fall for several months in a row and reach the lowest level in 2021.

“This paints a slightly brighter picture for the economy as many businesses contend with rising prices, labour shortages and supply chain issues and could be used by the Bank of England to justify adjusting monetary policy after unexpectedly leaving it unchanged in its most recent meeting”

Laura-Jane Rawlings, Chief Executive Officer, Youth Employment UK

Youth Employment UK’s CEO, Laura-Jane Rawlings said: 

 “It is very good news to see another positive labour market release, and aspects of youth unemployment being at pre-covid levels now. Programmes such as the Job Retention Scheme, Kickstart and others have protected young people as has the opportunity to remain in some form of education. 

“Now we have to once again return our focus to a bigger ambition for youth employment. We need to look for solutions to ensure young people are not vulnerable in the labour market, that those facing disadvantaged or not further disadvantaged and that there are quality opportunities for young people to thrive in.”

What Does This Mean For Youth Employment?

This data explores what this looks like for young people (16-24 years old).

In work:

  • The employment rate is 53.0%, up 1.3 percentage points (ppts) on the previous quarter, down 2.5 ppts since February 2020 (pre-pandemic).
  • There are 3.6 million in employment, up 90,000 on the quarter, but still down 220,000 since February 2020.
  • PAYE real time data shows that between October 2020 – 2021, 500,000 of the increase in payrolled employees are aged younger than 25 years.
  • 13.4% of all part-time workers are aged 16-24 years old – this has returned to similar levels seen pre-pandemic.

Unemployment:

  • The unemployment rate is 11.7%, down 1.4 ppt on the previous quarter, unchanged since February 2020.
  • 475,000 are unemployed; down 55,000 on the previous quarter and down 30,000, since February 2020.
  • 79.8% of those are aged 18-24, 20.2% are aged 16-17 years old.

Of those unemployed:

  • 310,000 have been so for up to six months, down 15,000 on the previous quarter and down 40,000 on pre-pandemic levels.
  • 80,000 have been so for between six and twelve months, down 30,000 on the previous quarter and largely unchanged on pre-pandemic levels.
  • 85,000 have been so for over 12 months, down 15.000 on the quarter, but up 15,000 on pre-pandemic levels.
  • 20,000 have been so for more than 24 months, a fall of 10,000 on the quarter and a fall of 5,000 on the year.
  • The claimant count in October 2021 stands at 350,000; this is a decrease of 11,000 on the month (-2.9%).

Economically inactive:

The economic inactivity rate for young people is 40%, down 0.5 ppts on the previous quarter and up 2.8 ppt since February 2020.

There are 2.7 million economically inactive young people; down 40,000 on the previous quarter, up 160,000 since February 2020.

Estimates for young people not in employment, full-time education, and training (NEET) stand at 880,000, up 30,000 on the quarter and down 95,000 since March 2020.

Headlines For All Ages

In work:

  • The employment rate is 75.4%, an increase of 0.4 ppts on the previous quarter, but 1.1 ppts lower than before the pandemic.
  • There are 32.5 million people in employment, up by 250,000 on the previous quarter, but down by 550,000 since March 2020.
  • PAYE data shows 29.3 million are in paid employment, up 160,000 (04 0.6%) on the quarter, and by 1.14 million (or 4%) over the previous 12 months. See bar chart 1 for the disparities across different sectors.
  • All regions except London are now above pre-coronavirus levels.. However growth has not been even throughout the regions; numbers of payrolled employees in the UK per region ranges from 768,000 in Northern Ireland to 4,132,000 in the South East in October 2021.
  • ‘Wholesale and retail’, ‘Health and social work’ and ‘Education’ (the three largest sectors in the UK) account for 40% of the UK employees. Administrative and support services, manufacturing, professional, scientific and technical, and accommodation and food service activities account for a further 30%.
  • Total actual weekly hours worked in the UK increased by 25.2 million hours from the previous quarter, to 1.03 billion hours. However, this is still 25.6 million hours below pre-pandemic levels (March 2020).
  • The redundancy rate is 3.7 per thousand, an increase of by 0.2 per thousand on the quarter. At its peak in September to November 2020, the redundancy rate stood at 14.4 per thousand.

Estimates of employment, unemployment, inactivity, average weekly earnings, vacancies and other labour market related statistics for the UK. This release also includes UK and non-UK people in the labour market and Labour market flows.

Documents

UK labour market: November 2021

Labour market statistics time series: November 2021

Labour market in the regions of the UK: November 2021

Earnings and employment from Pay As You Earn Real Time Information, UK: November 2021

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