Employment rose by 25,000 in March to May 2021 compared to the previous quarter but is 832,000 lower than before the pandemic. The timelier measure of PAYE employees increased by a record 356,000 in June 2021 compared to the previous month, but is still 206,000 lower than before the pandemic. The employment figures have been revised down from that published last month (in turquoise).
Unemployment is up by 222,000 from last year, but fell by 68,000 in March to May 2021 from the previous quarter. The number of people claiming unemployment-related benefits fell by 114,800 in June 2021 compared to the previous month, to stand at 2.32 million. Increased employment support from Jobcentre Plus could help to bring claimant unemployment more in line with the survey measure of unemployment in the months ahead.
After a sharp initial impact in spring 2020, there have been smaller changes in employment and unemployment overall than would be expected given the fall in economic output. We estimate unemployment would be around 2.5 million higher had it followed the path of economic output. Instead, the furlough scheme has helped to protect jobs.
The ONS has revised labour market data aiming to better reflect changes in population during the pandemic, in particular reductions in the number of EU workers. These have increased estimates of unemployment and reduced estimates of employment. The dotted turquoise line in the chart below shows employment estimates before the revision, while the yellow line shows the new estimates.
There are still high levels of uncertainty over these estimates as the pandemic continues. However, the revised estimates still suggest a similar picture with furlough limiting the impact on employment and unemployment that would be expected given falls in economic output.
The number of online vacancies as measured by Adzuna fell by two thirds during the spring 2020 lockdown but is now well above its pre-crisis levels, though with significant sectoral and geographical variations.
The furlough scheme and other economic support have protected millions of jobs and meant the labour market adjusted to lockdowns more through hours worked than by changes in employment. With lockdowns now easing across the country, the total number of hours worked returned to 96% of the February 2020 level at the end of June after an earlier reduction during the November-March lockdowns.
In significant part, this reflects falls in the number of people furloughed, as the economy began to reopen. The number of people furloughed rose to 4.9 million in February 2021, compared to 4 million in December 2020, but had fallen to 2.4 million at the end of May 2021 (of whom 1.2m were fully furloughed).
However, there are signs of a potential mismatch with anecdotal reports of employers finding some vacancies difficult to fill and sharp rises in the number of people in temporary work involuntarily: 531,000 people in temporary work, 34% of the total, want to be in more permanent work. This could reflect a mismatch in the labour market, or employer caution in taking on permanent staff as the economy slowly reopens. More than 1 million people are working part-time because they could not find a full-time job, 13% of all part-time workers.
The longer someone is out of work, the less likely they are to find work. Long-term unemployment can have damaging impacts on people’s career prospects, particularly young people, as well as to health and wellbeing.
The number of people aged 25 and over who are long-term unemployed, defined as out of work 12 months of more, has risen 105,000 (44%) since the pandemic started1. Youth long-term unemployment (defined as six months or more out of work) is up 72,000 (49%) since the pandemic started.
The Government has introduced support, including an extra 13,000 Jobcentre Plus Work Coaches and a Restart programme for people who are long-term unemployed. This must help people look for work, meet employers’ needs, and limit rises in long-term unemployment.
Young people account for 60% of the fall in employment, despite accounting for just 12% of total employment. As a result, the number of unemployed 16-24 year olds has risen 25,000 since the last pre-pandemic figure and 441,200 18-24 year olds are claiming unemployment-related benefits, 88% up on pre-crisis levels.
The most recent data show young people continue to be hardest hit, with the biggest drop in payroll employment, despite seeing the sharpest rise in the latest data. However, L&W research has showed that previous employment programmes have worked less well for older people aged 50 and over, so older people who have lost their jobs may need particular help.
The number of payroll employees is now above pre-pandemic levels in Northern Ireland, North East, North West and East Midlands. But it remains significantly lower in London, in part reflecting the importance of commuting, tourism, retail and hospitality to London’s economy.
Furlough rates fell across the country during May as the economy reopened. Nationally, total take-up rates decreased from 15% at the end of March to 8% by the end of May, and rates fell in every local authority area.
But furlough rates remained relatively high in many parts of the country, particularly those that have seen sharp increases in the claimant rate. One in seven employments in the London boroughs of Brent, Hounslow and Newham were furloughed at the end of May– areas that have seen among the highest claimant count rate increases since March 2020.