June 2022

Stephen Evans, Chief Executive at Learning and Work Institute, said:
The cost of living crisis is hitting hard with real regular wages falling more sharply this month than in any month this century. We face a year of pain. The Chancellor has increased the help on offer and needs to prepare to do more. We also need an urgent focus on getting our economy moving again so living standards can rise. The headlines suggest a tight labour market, with employment rising and unemployment and economic inactivity falling. But this fall in economic inactivity was driven by lower numbers of students, while the number of older people and those who are long-term sick out of work remains high. With employment still 366,000 lower than before the pandemic, it is this worker shortage that is driving a recruitment crisis. The Government and employers need to urgently address this.
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1. The cost of living is outpacing wages, with the largest monthly fall in real regular wages this century

The latest data show average regular earnings grew by 4.2% in the year to April 2022, though end of year bonuses for some pushed headline earnings growth up by 6.8%. With the Consumer Price Index rising by 9.0% in the year to April 2022, this means that real regular earnings have fallen over the year. In April, regular pay in real terms fell by -3.4%, the largest single month fall this century. The cost of living crisis is likely to deepen even further in the months ahead, with the Bank of England forecasting inflation to rise to around 10% this year.




2. Unemployment rose on last month, and employment is still 366,000 lower than pre-pandemic due to people leaving the labour market

Employment rose by 177,000 in February to April 2022 compared to the previous quarter but remains 366,000 lower than before the pandemic. The timelier but less comprehensive measure of PAYE employees increased by 90,000 in May 2022 compared to the previous month and is 627,000 above its pre-pandemic level.

Unemployment fell by a further 47,000, but short-term unemployment (under 6 months) rose by 58,000, with 36,000 (or two-thirds) of that rise being 18-24 year olds. The monthly estimate (rather than the quarterly one) shows a larger rise in unemployment. Economic inactivity is still 447,000 higher than pre-pandemic. This has fallen by 39,000 compared to the previous quarter, driven mainly by a fall in inactive students (down by 54,000) while inactivity among older people, the long-term sick and disabled and those looking after family continues to rise.



The number of vacancies in the ONS vacancy survey remains at record levels. The number of online postings from Indeed is 56% above the February 2020 level (seasonally adjusted).

3. There are fewer potential workers for employers to recruit, with 593,000 over 50s leaving the labour market since the pandemic started

Rises in economic inactivity have been primarily driven by those aged 50 and over and people with long-term health problems and disabilities. There are 2.34 million people economically inactive due to long-term sickness or disability, up 7.1% in the last year.





In addition, the number of people claiming unemployment-related benefits remains 284,600 above the survey measure of unemployment, despite a fall of 19,700 in May 2022 compared to the previous month. It is important that Jobcentre Plus engage with everyone on out-of-work benefits to ensure their status is recorded correctly and everyone who wants to work gets help to find a job.



4. Long-term unemployment continues to fall for both young people and adults, but remains higher than pre-pandemic for those aged 25+

Long-term unemployment is a particular concern as it reduces people’s chances of finding work and can reduce their health and wellbeing.

Long-term unemployment rose significantly through the pandemic. It has fallen recently for young people and is now 43,000 lower than pre-pandemic. There are 46,000 more people aged 25 and over out of work for 12 months or more than before the pandemic (Dec 19-Feb 20), and this is now falling (either due to people finding work or moving into economic inactivity).



There are 881,000 (12.9%) young people not in employment or full-time education, up on the lows seen in summer 2021 but down on pre-pandemic levels. There has been a rise of 29% in young people in education taking up work since last year, and it’s good news that youth unemployment and long-term unemployment are at record lows. However, the number of young people economically inactive and not in full time education (593,000 or 8.7% of young people) is 92,000 above its’ 501,000 minimum (November-January 1999). Support for young people remains too disjointed and a Youth Guarantee is needed to offer all 16-24 year olds a job, training place or apprenticeship.



5. The employment picture varies across the country

Employment rates are now higher in the West Midlands, London and the North East than pre-pandemic, but remain lower in other regions and countries. Economic inactivity is highest in Northern Ireland and the North East, and lowest in the South East and South West.






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