ONS Labour Market May – July 24 data: Employment levels at 74.8%. Sector Reaction

ONS released their latest data and findings on estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK.

Headline ONS Labour Market Data for May to July 2024:

• UK employment rate (for people aged 16 to 64 years) was estimated at 74.8%
• UK unemployment rate (for people aged 16 years and over) was estimated at 4.1%
• UK economic inactivity rate (for people aged 16 to 64 years) was estimated at 21.9%
• UK Claimant Count for August 2024 increased on the month and on the year, to 1.792 million
• Estimated number of workforce jobs was 37.1 million, up by 503,000 from the level of a year ago but down by 28,000 on the quarter.
• Estimated 42,000 working days lost because of labour disputes across the UK in July 2024

The estimated number of vacancies in the UK decreased by 42,000 on the quarter to 857,000.

The early estimate of payrolled employees for August 2024 decreased by 59,000 (negative 0.2%) on the month but increased by 122,000 (0.4%) on the year, to 30.3 million. The August 2024 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month.

The UK Claimant Count for August 2024 increased on the month and on the year, to 1.792 million. Commencing in May 2024, the Department for Work and Pensions are rolling out an increase in the administrative earnings threshold for full work search conditionality. This change is likely to affect around 180,000 claimants over a period of around six months, increasing the Claimant Count over that time.

In June to August 2024, the estimated number of vacancies in the UK decreased by 42,000 on the quarter to 857,000. Vacancies decreased on the quarter for the 26th consecutive period but are still above pre-coronavirus (COVID-19) pandemic levels.

In June 2024, the estimated number of workforce jobs was 37.1 million, up by 503,000 from the level of a year ago but down by 28,000 on the quarter. Employee jobs increased by 386,000 from the level a year ago and by 62,000 on the quarter to 32.7 million.

Annual growth in employees’ average regular earnings (excluding bonuses) in Great Britain was 5.1% in May to July 2024, and annual growth in total earnings (including bonuses) was 4.0%. This total annual growth is affected by the NHS and civil service one-off payments made in June and July 2023.

Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for regular pay was 2.2% in May to July 2024, and for total pay was 1.1%.

There were an estimated 42,000 working days lost because of labour disputes across the UK in July 2024. Most of the strikes were in the health and social work sector.

Sector Reaction to the September ONS Labour Market Data

Responding to the latest ONS figures, Stephen Evans, chief executive at Learning and Work Institute, said:

“The labour market continues to show signs of easing on most measures. Employment growth looks to have slowed at best and vacancies are down one third since their peak, though still above pre-pandemic levels. The Government will set out its plans to increase employment in the autumn as part of its push for growth. We estimate its 80% employment rate ambition would mean 2.4 million more people in work, boosting the economy by more than £20 billion. That requires extending support to the nine-in-ten out-of-work disabled people who don’t get help to find work each year. The challenge is large, but so is the prize.”

Ben Harrison, Director of the Work Foundation at Lancaster University said:

“Today’s figures reveal that while some UK labour market indicators are improving, 2.79 million working-age people remain sidelined from the workforce due to long-term sickness, leaving employment levels at 74.8% – lower than a year ago, and a long way short of the Government’s target of 80%.

‘The greatest employment challenge for a generation’

 “Unemployment has fallen slightly to 4.1% but economic inactivity due to ill-health remains stubbornly high at 2.79 million. And the reality is that the longer people are out of work, the harder it is for them to get back.

“Liz Kendall and the Government have this morning described this as ‘the greatest employment challenge for a generation’, but their plans to get Britain working are not quick fixes. They require a re-wiring of the welfare offer by overhauling the punitive culture of Jobcentres, improving public services and creating new relationships with local leaders to open up opportunities.

Over 73,000 people have left the labour market in the last year due to long-term sickness – on average 200 people per day

Ben Harrison, Director of the Work Foundation at Lancaster University continues: “While plans to get people back to work bed in, the Government must also work with employers to stem the flow of people leaving the labour market. Over 73,000 people have left the labour market in the last year due to long-term sickness – on average 200 people per day – and employers must be empowered to re-design job roles and provide flexibility around existing health conditions to help workers stay in sustained employment.  

“The real value of workers’ wages increased strongly by 2.2% on the year, despite pay growth easing. There has been a 14-month period of growth following the worst of the cost-of-living crisis, however, pay growth has been uneven across sectors. The public sector and manufacturing are currently seeing the strongest growth while pay growth is lagging behind in construction.”

The Recruitment and Employment Confederation (REC) Chief Executive Neil Carberry said:

“Employment is reasonably steady at the moment – no more than that. More noise from the new government about their growth plan would be helpful in steering employers’ thinking about how to invest, and in growing their confidence. This will put a bit more momentum into what is quite a turgid labour market right now.

“The slowdown in pay is quite clear now, despite the effects of awards in the public sector this summer. This should give confidence to the Bank on the future path for interest rates. Lower cost of capital could also drive confidence in business to invest.

“Our new Voice of the Worker campaign shows policymakers that working in flexible ways is essential to tackling economic inactivity. This is because it can match people’s increasing desire for flexibility with firms’ increasing need for a dynamic workforce. Government getting its labour market reforms right on the practical details for employers is crucial.”

TUC General Secretary Paul Nowak said:

“Working people are still facing major problems left behind by the Conservatives.

“Vacancies have been falling for more than two years. Millions of workers are in insecure jobs and without proper employment rights. And young people’s futures are on the line as youth unemployment rises.

“Most employers support the new government’s plans to make work pay and strengthen workers’ rights. It’s time to move on from the low-pay, low-rights approach that has failed so many people so badly.”

TUC Highlighted the following data

• Youth unemployment rate (for 18-24 year olds) hits 13.3%, up 1.4 percentage points on the quarter
• Vacancies have fallen for the last 26 months (down 42,000 on the quarter)
• While LFS data suggests employment is rising, HMRC data suggests that payrolled employees are falling

Louise Murphy, Senior Economist at the Resolution Foundation, said:

“While wage growth continues to weaken, even faster falling inflation over the summer means that workers have enjoyed long overdue real-terms pay rises of 2.2 per cent. This is the kind of healthy wage growth we took for granted before the financial crisis, but haven’t seen since.

“Workers’ income boosting pay rises this summer will also deliver an income boost for pensioners next Spring, as they will drive a £460 increase in the State Pension via the Triple Lock.

“But unless we see a marked increase in productivity, this honeymoon period of real wage growth is unlikely to last for long.”

Jack Kennedy, Senior Economist at Indeed comments  

“The labour market continues to cool, with a further drop in vacancies and wage growth continuing to ease. Though the unemployment rate dipped, ongoing methodology work to the labour force survey means this figure should be taken with a pinch of salt. 

“The gradual easing in wage growth paves the way for further Bank of England interest rate cuts before the end of the year. Though, they will need to see further progress on this front as it remains higher than they would like. 

“As the labour market has softened, we’ve seen a dip in the share of remote and hybrid job postings on Indeed in recent months, a sign of employers perhaps acceding less to worker preferences for flexibility. The share stood at 14.4% as of end-August, down from a peak of 16.4% back in January. However, it remains well up on pre-pandemic levels.”

Dr Jacqueline Hall, Head of Apprenticeships at BAE Systems, highlights the need for greater awareness of alternative routes into the workforce:

“The world of work is rapidly changing and there’s an urgent need for a highly-skilled agile workforce. To realise this ambition, it’s important we educate young people so they have the information and opportunities needed to make informed decisions about their future, highlighted by our recent research which shows just 6% of 18-24 year-olds in the UK know what an apprenticeship is.

“With recent ONS statistics showing the number of young NEET individuals rose by approximately 10 per cent YoY in April to June, improving understanding of careers advice – particularly alternatives to university which is seen as the traditional route – will be vital in addressing this figure as well as tackling economic inactivity.”