TIGHTEST LABOUR MARKET IN FIFTY YEARS, DRIVEN BY RECORD NUMBERS OF OLDER PEOPLE LEAVING LABOUR MARKET

Another article brought to you by FE News, supplying some of the latest labour market data and what some of the key players have been saying.

Now “nearly as many vacancies as there are unemployed” while 560,000 growth in inactivity among older people “dwarfs anything that we have seen in at least thirty years”

This morning’s Labour Market Statistics, covering October to December 2021, continue a run of worrying data in recent months:

• Employment, unemployment and economic inactivity are all virtually unchanged on last month’s figures, despite vacancies climbing to yet another record high (1.3 million) as employers struggle to fill their jobs.
• This means that overall there are now just under 1.1 unemployed people per vacancy, the lowest figure in at least fifty years, and a quarter of its peak in mid-2020 when there were more than four unemployed per vacancy.
• A key driver of this is fewer older people in work.  Economic inactivity among people aged over 50 has grown by 560 thousand since the crisis began, now accounting for 80% of the total growth in inactivity.
• Economic inactivity is now flat or falling for all other age groups, as it continues to rise for older people.
• The main reason for rising economic inactivity is now long-term ill health – which has now overtaken students as being the most common reason for not looking for work or being available for work. 
• New data on disability employment also shows that the employment ‘gap’ for disabled people has risen during the pandemic, and now stands at 29 percentage points.  This means that disabled people are two and half times more likely to be out of work than non-disabled people.
• New data on labour market flows also published today shows that job-to-job moves reached record levels at the end of last year as record numbers of people changed job.  ‘Resignations’ remain high but fell back slightly on the previous quarter, so there is relatively little sign so for of a ‘great resignation’ in the UK.
• Real wages fell by 1.2 per cent in the year to December – the largest fall in the value of earnings in eight years. The Bank of England forecasts that real wages will fall by £50 a month, on average, in 2022.
• Black and minority ethnic (BME) unemployment rates are still more than twice as bad as the rates for white workers.
• Over 1 million workers are now on zero-hours contracts – a rise of 40,000 over the year.

IES Director Tony Wilson, said:

“Supply simply can’t keep up with the demand in the labour market at the moment.  Despite vacancies hitting another record high, employment is still stuck more than half a million below pre-pandemic levels, with low unemployment appearing to be the result of people leaving the labour market entirely.  As a result this is now the tightest labour market in at least fifty years, with nearly as many vacancies as there are unemployed. These trends are being driven in particular by older people leaving work.  

“There are now nearly six hundred thousand fewer older people in the labour market than on the eve of the pandemic, falls which dwarf anything that we have seen in at least thirty years.  Overall, four fifths of the fall in labour force participation is due to fewer older people in the labour market.

“These labour shortages are now holding back our recovery and will make the living standards crisis worse.  At the Budget next month we need action to raise participation and tackle this recruitment crisis, particularly for older people and those further from work.”

IES Director Tony Wilson, said:

“Supply simply can’t keep up with the demand in the labour market at the moment.  Despite vacancies hitting another record high, employment is still stuck more than half a million below pre-pandemic levels, with low unemployment appearing to be the result of people leaving the labour market entirely.  As a result this is now the tightest labour market in at least fifty years, with nearly as many vacancies as there are unemployed. These trends are being driven in particular by older people leaving work. 

“There are now nearly six hundred thousand fewer older people in the labour market than on the eve of the pandemic, falls which dwarf anything that we have seen in at least thirty years.  Overall, four fifths of the fall in labour force participation is due to fewer older people in the labour market.

“These labour shortages are now holding back our recovery and will make the living standards crisis worse.  At the Budget next month we need action to raise participation and tackle this recruitment crisis, particularly for older people and those further from work.”

Stephen Evans, Chief Executive of Learning and Work Institute, said:

The cost of living crisis is setting in, with real wages falling in the last quarter of 2021. This is only likely to worsen with current inflation and rising energy prices – the Government must do far more to help protect living standards.

Meanwhile, the recruitment crisis continues. The Government’s Way to Work initiative is focused on the wrong problem and it should instead do more to help the 1.1 million fewer people in the labour market than on pre-pandemic trends, driven by rising numbers of people who are long-term sick. This shortage of workers is making recruitment difficult and means employment is still almost 600,000 lower than pre-pandemic despite record vacancies. We need a new Plan for Jobs, Growth and Living Standards.”

James Reed, Chairman of Reed.co.uk, Britain’s leading recruitment brand, said:

“The jobs boom has very much continued into 2022. We are continuing to see record numbers of job postings on Reed.co.uk. Over 340,000 jobs went live on Reed.co.uk in January – an 80% year-on-year increase – and on the first Tuesday 4th January the first working day of the new year, over 32,000 jobs went live on our site in 24-hours, a new record. 

“The UK labour market remains buoyant, and this seems to be giving more confidence to the workforce. Jobseeker applications on Reed.co.uk rose by 50% in January month-on-month. We are at the start of a year of significant movement in the labour market and now is the great time to make a career change. I urge anyone thinking of switching jobs to take advantage of the record levels of vacancies now available right across the UK economy.”

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

“The good news is that the UK economy is continuing to create jobs. The bad news is that businesses are struggling to hire and pay is failing to keep up with inflation.

“Bold action is needed to go for growth, with steps to address skills and labour shortages. Replacing the apprenticeship levy with a Skills Challenge Fund and creating a new independent Council for Future Skills to optimise policy towards avoiding shortages in the future are important first steps.”

Real wage squeeze is creating “perfect cost-of-living storm”. Commenting on the February inflation figures, which show CPI in January up to 5.5% ahead of wage growth in December at 3.7%, TUC General Secretary Frances O’Grady said:

“If real wages keep losing value, families will spend less, business revenues will fall, and the recovery will be choked off.

“But there is a way out of the cost of living crisis. The Chancellor must fund real pay rises across the public sector and raise the minimum wage to £10. This will boost household spending, helping businesses recover and creating conditions for wage growth across the economy.

“And working people must get stronger pay bargaining rights, so that unions can win fair pay rises. That’s how we can finally end the longest pay squeeze in more than 200 years.”

Frances continued:

“Working families need financial security. But they face a perfect cost-of-living storm.

“Pay packets are plummeting in value as bills and prices sky-rocket. 

“This huge pressure on household budgets will only get worse unless the government takes proper action.

“… Britain urgently needs a pay rise.”

On minority ethnic unemployment figures, Frances O’Grady said: 

“Covid-19 has shone a spotlight on the racism BME workers face in the labour market. Today’s figures show that BME workers are more than twice as likely as white workers to be unemployed.“Ministers must challenge the discrimination that holds BME workers back. Banning zero-hours contracts and introducing mandatory ethnicity pay gap reporting would be a good start.”On Zero-hours contracts Frances O’Grady said: “Everyone deserves to be treated with dignity and respect at work. But over a million people are still having to rely on zero-hours contracts to make ends meet.“Many are key workers – in sectors like social care. Their reward for helping to get Britain through the pandemic is low pay and insecure terms and conditions.  “The time for excuses is over. The government must publish its long overdue employment bill and ban exploitative practices – like zero-hours contracts – once and for all.”

Chancellor of the Exchequer, Rishi Sunak said:

“Our £400bn economic plan has protected our jobs market through the pandemic and it is now healthier than most could have hoped for. 

“Payrolled employee numbers are at a record high and redundancies are at an all time low thanks to our Plan for Jobs.

“We’re continuing to help more people into work, and are providing support for the cost of living worth over £20 billion across this financial year and next.”

Minister for Employment, Mims Davies MP said:

“Today’s figures show further positive signs of recovery, with unemployment continuing to drop and 436,000 people joining company payrolls since the start of the pandemic, a record high number of employees including more young and older workers.

“Through our Way to Work campaign we are making sure that anyone who is ready to work can get into a job faster than ever before, allowing them to progress to a fulfilling career, giving them financial independence as well as improved wellbeing.”

Kirstie Donnelly MBE, CEO of City & Guilds commented:

“With just 4.1% of the population unemployed, we are now nearly back to pre-pandemic levels of unemployment, but we’re by no means back to normality. The labour pool has shrunk dramatically thanks to the double impact of Brexit and the pandemic on our non-indigenous workforce. And the number of open job vacancies continues to increase as businesses struggle to recruit the skilled talent they need – now standing at a record 1,298,400.

“The most worrying thing is that many of those jobs that employers are struggling to fill are critical to keeping our country running – such as health and social work and transport – and are the very ones that were deemed essential or key worker roles during the pandemic. Our Great Jobs research found that these essential sectors are most likely to be at risk of a labour crisis, as low levels of interest from the working population compound growing numbers of vacancies.

“We desperately need to look at how we can make these essential, jobs more attractive and encourage some of the 21.2% of economically inactive working age people back into the workplace. Crucially, Government needs to grant adults better access to relevant training and reskilling opportunities throughout 50 years working lives. Employers should consider how they might make their workplaces more accessible to people currently locked out of the labour market – such as women, people who have been in prison and those with disabilities. The Government’s recent moves to allow prisoners to take apprenticeships are a great example of the sorts of interventions that could be used to unlock jobs for people who need them and provide employers with much needed workers.”

Walid Koudmani, chief market analyst at financial brokerage XTB comments:

“While unemployment continues to show signs of improvement, continued support from the Bank of England and a return to normal conditions could be crucial to maintaining this trend. 

“Furthermore, any escalation in tensions or a continued inflationary pressure could hinder the job market along with the majority of sectors in the economy.”

Geoff Smith, CEO of emerging talent management consultancy, Grayce:

“The latest labour market statistics from the ONS mask the reality facing many employers looking to hire and young job seekers today. Youth unemployment is down but vacancies are at a record high, which is driving up wage inflation. At the same time, we see great swathes of graduates – with a huge propensity to learn – leaving university and taking roles that are under-utilising their skill sets.

“The pandemic showed us that the businesses who pivoted to digital ways of working were the ones to ride out the storm and come out the other side. But how can organisations be expected to drive genuine change in business if they’re being led by a bunch of like-minded, middle-aged, white men? We need diversity of thought and must re-skill, and to do so, we need young minds. It’s no coincidence that digitally native people drive the best digital transformation. 

“The digital workforce is nothing short of vital if we’re to see continued economic recovery. Young people who are committed to continuous learning and development have a better chance of remaining employable, but also helping their organisations get ahead of the competition. And, as digital services and technologies continue to evolve, businesses will need to hire talented people who are willing and ready to adapt their skill set. Harnessing this talent will be vital to maintaining the furious pace of digital change.”

Labour market recovery risks stalling if we don’t have a new plan for jobs & tackle cost of living crunch

2. Employment fell less during pandemic due to furlough et al, but signs employment rate recovery might be stalling. Particularly concerning given economic growth seems to have weakened again. pic.twitter.com/ILzrG3nAOn— Stephen Evans (@Stephen_EvansUK) February 15, 2022

4. The rise in inactivity is largely younger people staying in education (a good thing if it’s high quality learning) and older people including a rise in people who are long-term sick. pic.twitter.com/ODk69RQTbS— Stephen Evans (@Stephen_EvansUK) February 15, 2022

6. Don’t lose sight of big picture. Employment falls far less than expected early in pandemic and recovery underway. But it risks stalling. I hope next month’s budget includes a new plan for jobs, growth & living standards.— Stephen Evans (@Stephen_EvansUK) February 15, 2022

8. If you want to see a success, look at the falls in long-term unemployment (though still above pre-pandemic levels). Need to apply to those dropping out the labour market to ease the recruitment crisis. pic.twitter.com/0dOZlZVyOa— Stephen Evans (@Stephen_EvansUK) February 15, 2022

UK Labour Market: February 2022

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, number of people on zero hour contracts and Labour market flows.