Number of payroll employees has increased for the fifth consecutive month but remains below pre-pandemic levels

UK labour market: May 2021 

The latest figures suggest that the jobs market has been broadly stable in recent months, with some early signs of recovery.

The number of payroll employees has increased for the fifth consecutive month but remains 772,000 below pre-coronavirus (COVID-19) pandemic levels. Since February 2020, the largest falls in payrolled employment have been in the hospitality sector, among those aged under 25 years, and those living in London.

Following a period of employment growth and low unemployment, since the start of the pandemic, employment has generally been decreasing and unemployment increasing. However, the latest estimates for January to March 2021 show signs of recovery, with a quarterly increase in the employment rate. Meanwhile, there was a quarterly decrease in the unemployment rate and the economic inactivity rate increased on the quarter. With the reintroduction of many coronavirus restrictions, total hours worked decreased on the quarter.

Young people (those aged 16 to 24 years) have been particularly affected by the pandemic. Over the last quarter there was a decrease in the employment and unemployment rates for young people, particularly amongst 16- to 17-year-olds. This suggests that more young people are staying in education and not looking for work, which is supported by the record economic inactivity rate of young people in full-time education.

In recent months, the number of people temporarily away from work has fallen including both those away from work because of the pandemic receiving no pay and those on full pay. Those receiving partial pay while away from work has remained stable over the period.

In February to April 2021, the number of vacancies reached its highest level since January to March 2020, with most industries displaying increases over the quarter, most notably, accommodation and food service activities. Both the experimental single-month vacancies and experimental Adzuna measures showed strong increases in April. However, the headline number of job vacancies remains below the pre-pandemic levels, with arts, entertainment and recreation, and accommodation and food service activities industries the worst affected.

Annual growth in average employee pay continued; the growth is driven in part by compositional effects of a fall in the number and proportion of lower-paid employee jobs. Bonus payments in February and March were slightly down on last year, causing slower total pay growth rate compared with regular pay growth.

Sector Reaction to UK Labour Market statistics

Labour market recovery masks fastest rise in long-term unemployment since 2010 – Long-term unemployment is up by 28% on last year – with long-term unemployment among over-50s at its highest since 2016.

Chancellor of the Exchequer Rishi Sunak said:

“Protecting and creating jobs continues to be my top priority. While sadly not every job can be saved, nearly 2 million fewer people are now expected to be out of work than initially expected – showing our Plan for Jobs is working.

 “Thousands of young people are finding work through our Kickstart scheme, and the extension of the furlough and self-employed support schemes beyond the end of the roadmap means people’s jobs will continue to be protected while the economy gradually reopens.”

IES Director Tony Wilson said:

“Today’s figures confirm that the labour market is turning the corner – with a sharp rise in employee jobs in April as the economy reopened, vacancies rising and unemployment now clearly trending down.

“However you don’t have to look too far to see the lasting damage caused by a year of lockdowns and disruption. Long-term unemployment rose by more than a quarter in the last year, its fastest rate of growth since the 2010 crisis.

“Older people in particular are now starting to see sharp rises, with long-term unemployment reaching its highest in five years. With many firms reporting difficulties in filling jobs as the economy reopens, government and employers will need to do more to bring the long-term unemployed back into work and help avoid this crisis leading to lasting scars.”

Stephen Evans, chief executive of Learning and Work Institute, said:

“The labour market has stabilised and is showing signs of recovery with vacancies rising and payroll employment increasing again. The Government deserves credit for policies like the furlough scheme, without which unemployment could have been 2.5 million higher.

“Nonetheless the crisis has had a significant impact with unemployment up and groups like young people hit particularly hard. Youth long-term unemployment is already 50% higher than last year and unemployment has risen fastest in areas where it was already highest.

“The crisis isn’t over and the labour market is likely to take years to recover, so there’s more to do to help people to find work quickly.”

Matthew Percival, CBI Director of People and Skills, said:

“Having the highest number of vacancies since the pandemic first hit shows the value of the roadmap for reopening the economy. However, businesses are starting to report vacancies they’re struggling to fill so government support for skills and retraining is essential.

“Businesses increasingly need to know what rules will be in place after 21 June to make their next reopening decisions. They’re hoping to avoid any further bumps in the road and will be closely watching the trajectory of new variants and the conclusion of reviews into social distancing and Covid-status certificates.”

Eleanor Harrison OBE, Chief Executive at youth charity Impetus is calling for coordinated long-term support for young people:    

“Young people make up nearly two-thirds of job losses since the start of the pandemic. As many clamber to spend savings and disposable income at newly reopened pubs and restaurants, this will be the first income for many young people since the beginning of the pandemic as they return to work in the hospitality sector, one of the largest employers of under-25s.

“A coordinated long-term plan is needed to support the thousands of young people still looking for a way back into meaningful work, starting with the extension of the government’s flagship youth employment scheme; Kickstart is not a nice to have – it’s a must .”   

Rebecca McDonald, Senior Economist at the Joseph Rowntree Foundation, said:

“A year on from the first lockdown, there is optimism the labour market is springing back into action as job vacancies rise. But, while the furlough scheme has successfully kept unemployment much lower than it could have been, those on low pay and less secure contracts have been most likely to lose their jobs so far. We need to keep a close eye on the fact that three quarters of a million people have been unemployed for more than 6 months, given how damaging a long period out of work can be for workers’ job prospects and their families’ living standards. They will be anxious about the future and need urgent support to get them back into good quality jobs quickly.

“Our country is in a race to get people back into their existing jobs or into new work before the furlough scheme is rightly wound down in September. As we rebuild from this crisis, we need to ensure the economy is built on stronger foundations. This means creating better jobs that offer the pay, security and flexibility workers need to provide a decent quality of life for themselves and their families.”

Lee Biggins, CEO and Founder of CV-Library, the UK’s leading independent job board said:

“Whilst we welcome the latest Labour Market Statistics, which show the largest quarterly decrease in unemployment since 2015, events of the last 14 months render these figures far less indictive of the job market than usual. With the furlough scheme still running and the lockdown roadmap easing over this period, however great these numbers look, we must keep them in perspective.”

“Our data supports the significant growth in vacancies reported but, what is also apparent, is how cautious Brits have become in applying for new jobs. Of course, this is understandable, especially given the current reporting of a new COVID variant, but true recovery can only continue if businesses and job hunters are on the same page.”

Aspire Founder, Paul Farrer, commented:

“Unemployment is falling and the number of job opportunities out there is increasing – both signs that the economic recovery is well underway. As lockdown restrictions ease, the fact that businesses are hiring to meet an upturn in demand is really good news. 

“Those businesses on a hiring spree may be unaware of the shortage of available talent out there. We’re noticing that the number of people applying for a job has dropped to pre-pandemic levels, with workers not possessing the skills required to fill available positions. This is why the government’s recent commitment to invest in training and skills is so important – although the benefits of this will take some time to appear.

“While the ONS data is largely positive, we aren’t out of the woods just yet. With the end of the furlough scheme in sight, some firms, particularly those in the hospitality, leisure and travel sectors will have difficult decisions to make over the future of their staff if there is any change to the roadmap out of lockdown.”

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.

UK labour market: May 2021

Publications

Vacancies and jobs in the UK: May 2021

Estimates of the number of vacancies and jobs for the UK.

Labour market overview, UK: May 2021

Estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK.

Employment in the UK: May 2021

Estimates of employment, unemployment and economic inactivity for the UK.

Average weekly earnings in Great Britain: May 2021

Estimates of growth in earnings for employees before tax and other deductions from pay.