January 2024

Stephen Evans, chief executive at Learning and Work Institute, said:
A further worrying rise means there are now 1.25 million young people not in work or full-time education, up 29% since the pandemic. The data are uncertain, but rises seem highest among young men. Being not in education, employment or training (NEET) when young has a scarring effect on long-term career prospects. The Government therefore needs to redouble efforts to introduce a Youth Guarantee so every young person gets the education and career support they need.
Helen Gray, chief economist at Learning and Work Institute, said:
This month's labour market figures show that there has been little change in employment levels, a modest reduction in the number of people who are economically inactive and an increase in the unemployment rate compared with the previous quarter. There continue to be 1.9 million people who are economically inactive but would like a job in addition to the 1.5 million people who are unemployed on the official measure. Expanding employment support to economically inactive people is essential if the government is to meet its ambition of an 80% employment rate.

1. Headline indicators

Employment in November 2024 stayed virtually unchanged on the previous month (a rise of 2,000) at 32,227,000. It was also at a very similar level to the June-August 2024 quarter, with only a small increase of 8,000 in September-November 2024. The employment rate for those aged 16-64 fell to 74.8% from 75.0% in the previous quarter.

Economic inactivity for those aged 16-64 fell by 54,000 on the previous quarter to 9.3 million. The economic inactivity rate fell to 21.6%, from 21.8% in the last quarter.

Unemployment (for those aged 16-64) increased by 135,000 compared with the previous quarter, to 1.53 million. The unemployment rate rose to 4.5%, from 4.1% in the previous quarter.

To explore how key labour market indicators have changed over the past 10 years, see our interactive labour market dashboard.

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2. Divergence between the Labour Force Survey and other sources in recent years

Our headline indicators are based on data from the Labour Force Survey, but since the pandemic this has experienced a decline in the response rate which affects the reliability of estimates from this source. This is illustrated by the divergence in the employment rate estimated from the LFS and other sources over this period. While the ONS seeks to resolve these issues, we are publishing an experimental estimate of the employment rate based on an approach developed by the Resolution Foundation and using administrative data sources, such as HM Revenue and Customs payroll and self-assessment data on the numbers of people self-employed. This measure indicates that in November 2024 the employment rate for those aged 16 to 64 stood at 75.9%. This was 1.1 percentage points higher than the LFS estimate. We aim to refine this approach in the months ahead.

Chart 1a

 

3. Nominal pay rises continue to outstrip inflation

The latest data show average regular earnings grew by 5.6% in the year to November 2024, up from 5.2% in October 2024 and down from the post-pandemic peak of 7.9% in August 2023. For public sector workers average regular earnings grew by 4.1% in the year to November 2024, while average regular earnings grew by 6.0% for private sector workers. After taking account of inflation, real regular earnings went up by 2.5% (3-month average change) in the year to November 2024, with the single month data for November showing a real-terms increase of 2.1% over the year.

The rate of inflation remained unchanged between November and December 2024, at 3.5%. In the year to December 2024 core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.2%, slightly down on the 4.4% increase seen in the year to November 2024. This fall in the rate of increase was driven by recent reductions in the magnitude of the rise in the price of services, as inflation in the price of goods actually rose. The inflation rate for services fell from 5.7% in November to 5.4% in December 2024 while the rate of inflation for goods increased from 0.4% to 0.7% over the same period.

Inflation in areas like Housing and household services, Owner occupiers’ housing costs, Health, Communication and Education is still high. In November the UK had the highest rate of inflation in the G7. The United States is currently experiencing an inflation rate of 2.7% while the Eurozone average is 2.2%. Weak growth since the global financial crisis means average earnings are around £12,000 per year lower than if pre-crisis trends had continued.

Chart 2 (1)

 

4. There are fewer potential workers for employers to recruit, with nearly 1 million fewer over 50s in the labour market since the pandemic started

Recruitment has been more challenging for employers since the pandemic because of rises in economic inactivity – people leaving the labour market. The number of people aged 50 to 64 who are economically inactive has increased by 9.0% since the pandemic started.

Economic inactivity has fallen slightly in the most recent quarter, with the rate standing at 21.6% for those aged 16-64 in September to November 2024 – down from 21.8% in the previous quarter. Overall, the number of those aged 16-64 who are economic inactive is 857,000 higher than pre-pandemic, yet only one-in-ten out-of-work older people and people with a disability get employment support each year. The Government needs to extend employment support to more people outside the labour market and employers need to think about recruitment and job design to attract and retain staff.

Chart 3

 

5. The proportion of 16-to-24-year-olds not in employment or full-time education has risen over the past year

The unemployment rate for young people aged between 16 and 24 in the September to November 2024 quarter was 14.5%, 2.1 percentage points higher than the rate in the same quarter one year earlier (12.4%). The number of young people aged between 16 and 24 who are not in employment or full-time education currently stands at 1,262,000.

The percentage of those aged 16-17 who were not in employment or full-time education was higher in September to November 2024 compared with the same quarter one year earlier (10.1% and 7.9% respectively). Over the same period the percentage of 18 to 24-year-olds who were not in employment or full-time education rose from 17.3% to 19.1%. Our Youth Opportunity Index gives a detailed portrait of the opportunities and challenges for every young person broken down by local education authority.

Chart 5 (1)

 

Chart 6

 

6. Vacancies are gradually falling, but 1.9 million people who are economically inactive want a job

Headline vacancies in the October to December 2024 quarter were virtually unchanged on the previous month (down by 1,000), at 812,000, and 24,000 lower than in the previous quarter. The headline ONS vacancy figure is both seasonally adjusted and a three-month average. Using the official measure of unemployment, there are 1.9 unemployed people for every vacancy. However, there are an additional 1.9 million people who are economically inactive but want a job. Extending employment support to this group would potentially ease recruitment pressures for employers.

Chart 7

 

7. Numbers claiming unemployment-related benefits continue to exceed the ILO measure of unemployment

From those aged 16 or more, unemployment in the September to November 2024 quarter was 1,568,000. The quarterly headline figure has risen by 133,000 since June to August 2024. The ONS figure for claimant unemployed is 1,743,000, but includes some individuals who are in very low-paid work and are therefore required to search for more, or better paid employment. Changes to work search requirements from May 2024 onwards resulted in an increase in the numbers of claimant unemployed in the months following this discontinuity. In November 2024 the number of unemployed people who were claiming unemployment-related benefits was 175,000 higher than the number unemployed on the official measure.

Chart 8

 

8. Unemployment rates fairly stable for older people but remain high for those aged 16-24

The 16-to-24-year-old unemployment rate (including students) was 14.5% of the economically active in the September to November 2024 quarter. The rate for those aged 25 to 49 was 3.3%. For those aged 50 and over it was 2.6%. Compared with the previous quarter the unemployment rate has risen by 0.7 percentage points for 16-to-24-year-olds, has increased by 0.5 percentage points for those aged 25 to 49 and is unchanged for those aged 50 or more. Compared with the September to November quarter of 2023, the unemployment rate for 16-to-24-year-olds was 2.1 percentage points higher in the same quarter in 2024, while it was virtually unchanged (0.2 percentage points higher) for those aged 25 to 49 and only slightly higher (up by 0.3 percentage points) for those aged 50 or more.

Chart 9

9. Long-term unemployment rising for young people in particular

Youth long-term unemployment (which can include students) is up by 37,000 over the last quarter and stood at 215,000 in the September to November 2024 quarter. It has risen by 75,000 over the past year. Long-term unemployment for young people is normally counted as being unemployed for six months or more.

Adult long-term unemployment on the survey measure was 218,000 in the September to November 2024 quarter. The number of people aged 25 and over out of work for 12 months or more was 25,000 lower in the most recent quarter than in the previous quarter (June to August 2024). Compared with the same quarter one year earlier, adult long-term unemployment has risen by 41,000.

Chart 10

 

10. The employment picture varies across the country

The smaller sample sizes underlying regional estimates of employment and economic inactivity mean that caution is needed in interpreting changes over time. However, employment rates in the September to November quarter of 2024 were higher than the equivalent quarter in 2023 in Scotland, London, the East of England and the East Midlands. Scotland and the East of England saw the largest increase in the employment rate, at 1.2 percentage points. By contrast, employment rates in September to November 2024 were lower than they had been one year earlier in Wales, the South East of England, Yorkshire and the Humber and the North East. The fall in the employment rate over this period was greatest in Yorkshire and the Humber, where it declined by 1.7 percentage points. In Northern Ireland, the South West of England, the West Midlands and the North West there was little change in the employment rate over this period.

The rate of economic inactivity in the September to November quarter of 2024 was lower in Scotland, Wales, the South West, London and the East of England than it was one year earlier. The reduction in economic inactivity was greatest in London, where it fell by 2.2 percentage points between 2023 and 2024. In the South East of England, Yorkshire and the Humber and the North West the rate of economic inactivity rose compared with one year earlier. The increase in the rate of economic inactivity was most pronounced in Yorkshire and the Humber, which saw a rise of 1.3 percentage points. In Northern Ireland, the West Midlands, the East Midlands and the North East, there was little change in the rate of economic inactivity compared with one year earlier. This varying picture, which is even greater at sub-regional level, shows the importance of tackling inequalities so everyone has a fair chance in life wherever they live.

Chart 11

 

Chart 12

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