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Labour market statistics: August 2020

11th August 2020

Commenting on today's labour market data, ONS Deputy National Statistician for Economic Statistics Jonathan Athow said:

"The labour market continues recent trends, with a fall in employment and significantly reduced hours of work as many people are furloughed.

"Figures from our main survey show there has been a rise in people without a job and not looking for one, though wanting to work. In addition, there are still a large number of people who say they are working no hours and getting zero pay.

"The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs.

"Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed."

Main points

Early indicators for July 2020 suggest that the number of employees in the UK on payrolls is down around 730,000 compared with March 2020. Flows analysis suggests that the falls in May, June and July are mainly because of fewer people moving into payrolled employment.

Survey data show employment is weakening and unemployment is largely unchanged because of increases in economic inactivity, with people out of work but not currently looking for work.

The decrease in employment on the quarter was the largest quarterly decrease since May to July 2009 with both men and women seeing decreases on the quarter. The quarterly decrease in employment was also driven by workers aged 65 years and over, the self-employed and part-time workers. Meanwhile full-time employees largely offset the decrease.

Hours worked has continued to fall reaching record lows both on the year and on the quarter.

A large number of people are estimated to be temporarily away from work, including furloughed workers; approximately 7.5 million in June 2020 with over 3 million of these being away for three months or more. New analysis shows that the youngest workers, oldest workers and those in manual or elementary occupations were those most likely to be temporarily away from paid work during the coronavirus (COVID-19) pandemic. There were also around 300,000 people away from work because of the pandemic and receiving no pay in June 2020.

Vacancies are showing increases in the latest period, driven by the smaller businesses, some of which are reporting taking on additional staff to meet COVID-19 guidelines.

The Claimant Count reached 2.7 million in July 2020, an increase of 116.8% since March 2020.

Pay fell for all measures in the three months to June 2020. However, for the sectors of wholesaling, retailing, hotels and restaurants and construction where the highest percentage of employees returned to work from furlough, there is a slight improvement in pay growth for June 2020.

April to June figures show weakening employment rates, with numbers of self-employed and part-time workers seeing reductions; despite these falls, unemployment was not rising, because of increases in people out of work but not currently looking for work; the reduction in total hours worked is a record both on the year and on the quarter, with the whole period covering a time since the introduction of coronavirus measures.

Early estimates for July 2020 from Pay As You Earn (PAYE) Real Time Information (RTI) indicate that the number of payroll employees fell by 2.5% (730,000) compared with March 2020.

The Claimant Count increased in July 2020, reaching 2.7 million; this includes both those working with low income or hours and those who are not working.

Vacancies in the UK in May to July 2020 were at an estimated 370,000; this is 10% higher than the record low in April to June 2020.

The three months to June 2020 saw strong falls in pay; total nominal pay fell by 1.2% on the year and regular nominal pay fell by 0.2% (the first negative pay growth in regular nominal earnings since records began in 2001).

Employment

Employment measures the number of people aged 16 years and over in paid work and those who had a job that they were temporarily away from (which they are expecting to return to). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

Estimates for April to June 2020 show 32.92 million people aged 16 years and over in employment, 113,000 more than a year earlier but 220,000 fewer than the previous quarter.

For April to June 2020:

the estimated employment rate for all people was 76.4%; this is 0.3 percentage points up on the year but 0.2 percentage points down on the quarter

the estimated employment rate for men was 80.2%; this is largely unchanged on the year and 0.3 percentage points down on the quarter

the estimated employment rate for women was 72.8%; this is 0.7 percentage points up on the year and 0.1 percentage points down on the quarter

Looking more closely at the decreases in employment over the quarter by age, those aged 16 to 24 years decreased by 100,000 to 3.72 million, while those aged 65 years and over decreased by a record 161,000 to 1.26 million. This was partially offset by those aged 25 to 64 years, who increased by 41,000 on the quarter to 27.94 million.

Looking at the estimates for April to June 2020 by type of employment, the number of self-employed has shown a sharp fall, which is not reflected in employees. In particular, there were 28.02 million employees (85.1% of all people in employment), 52,000 more than the previous quarter, and 4.76 million self-employed people (14.5% of all people in employment), a record 238,000 fewer than the previous quarter.

Unemployment

Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

Estimates for April to June 2020 show an estimated 1.34 million people were unemployed, 9,000 more than a year earlier but 10,000 fewer than the previous quarter.

For April to June 2020:

the estimated UK unemployment rate for all people was 3.9%; this is largely unchanged on both the year and the quarter

the estimated UK unemployment rate for men was 4.1%; this is largely unchanged on the year earlier but 0.1 percentage points down on the quarter

the estimated UK unemployment rate for women was 3.7%; this is 0.1 percentage points higher than a year earlier and 0.1 percentage points higher on the quarter

Despite the lack of overall increase in the number of unemployed people, the estimated number of people unemployed aged 16 to 24 years increased by 41,000 on the year, to 543,000. Other age groups saw falls or very little change over the year.

Looking at the duration of unemployment, it is those unemployed for up to six months who are seeing the largest increases, up 150,000 over the year to 943,000. The decrease in longer-term unemployment means that overall, the unemployment remains unchanged.

The relative flatness of the unemployment figures may seem surprising. However, to be unemployed someone has to say that they do not have a job and that they are currently actively seeking and available for work.

Last month, we reported on a group of employees who, because of the impact of the coronavirus, have reported that they are temporarily away from work and not getting paid; in June 2020, this is estimated to account for approximately 300,000. Similarly, there are a group of self-employed people who are temporarily away from work but not eligible for the Self-Employment Income Support Scheme (SEISS). This month, we have published an article giving further information on people who are temporarily away from paid work. Although these people consider themselves to have a job and therefore are consistent with the ILO definition of employment, the lack of income means that they may soon need to look for work unless they are able to return to their job.

It is also possible to identify certain groups who are economically inactive as they are not currently looking for work but may look for work in the future. These are primarily those who want a job but are not yet looking; however, it also includes those who report they do not want a job but either do not believe jobs are available, are not yet looking, or are inactive for some other unspecified reason. The number of people in these categories has increased by 383,000 on the quarter.

Between January to March 2020 and April to June 2020, the number in these groups - the inactive who may begin to seek work and who are temporarily away from work for coronavirus-related reasons, without earnings - increased by 1.03 million to 2.13 million (Figure 6). This increase of people who are around the fringes of unemployment may explain why unemployment under the ILO definition has not increased.

Economic inactivity

Economic inactivity measures people without a job but who are not classed as unemployed because they have not been actively seeking work within the last four weeks and/or they are unable to start work within the next two weeks. Our headline measure of economic inactivity is for those aged between 16 and 64 years.

Estimates for April to June 2020 show 8.44 million people aged between 16 and 64 years not in the labour force (economically inactive), 127,000 fewer than a year earlier and 82,000 more than the previous quarter.

For April to June 2020:

the estimated economic inactivity rate for all people was 20.4%; this is down by 0.4 percentage points on the year but up by 0.2 percentage points on the quarter

the estimated economic inactivity rate for men was 16.4%; this is largely unchanged on the year and up 0.3 percentage points on the quarter

the estimated economic inactivity rate for women was 24.3%; this is down by 0.7 percentage points on the year but up by 0.1 percentage points on the quarter

Those who are economically inactive and who want a job increased by 235,000 on the year and 218,000 on the quarter, while those who do not want a job decreased by 362,000 on the year and 135,000 on the quarter. This suggests that people who want employment are not currently looking for work, and it is a further explanation of why we are not seeing a large rise in unemployment.

See the full report at

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest#main-points