Labour Market Overview, Uk: February 2021 - Unemployment Highest For 5 Years

23rd February 2021

Since February 2020, the number of payroll employees has fallen by 726,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic, with the latest two months recording small increases

New analysis by age band shows that the 18 to 24 years age group has seen the greatest decrease in payrolled employees since February 2020.

Data from our Labour Force Survey (LFS) shows the unemployment rate continued to increase, while the employment rate continued to fall. Although total hours worked continued to increase from the low levels in the previous quarter, this increase slowed in the latest quarter. The number of people temporarily away from work has fallen since its peak in April and May 2020, although it has increased slightly in November and December. The number of people away from work because of the pandemic and receiving no pay has also fallen since the start of the pandemic but risen slightly over the last two months.

The number of job vacancies in November 2020 to January 2021 was 26% lower than a year ago. This is an improvement on the position in summer 2020 when vacancies were down by nearly 60% year on year, but the rate of improvement has slowed in the past few months. Further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry.

Annual growth in average employee pay continued to strengthen; the growth is driven in part by compositional effects of a fall in the number and proportion of lower-paid employee jobs, and by increased bonuses, which had been postponed earlier in the year.

In January 2021, 83,000 more people were in payrolled employment when compared with December 2020; this is the second consecutive monthly increase.

In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020.

The UK employment rate, in the three months to December 2020, was estimated at 75.0%, 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.

The UK unemployment rate, in the three months to December 2020, was estimated at 5.1%, 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.

The redundancy rate, in the three months to December 2020, was estimated at 12.3 people per thousand employees.

The Claimant Count increased in January 2021, to 2.6 million; this includes both those working with low income or hours, and those who are not working.

There were an estimated 599,000 vacancies in the UK in November 2020 to January 2021; this is 211,000 fewer than a year ago and 64,000 more than the previous quarter.

Growth in average total pay (including bonuses) among employees for the three months October to December 2020 increased to 4.7%, and growth in regular pay (excluding bonuses) also increased to 4.1%.

Early estimates for January 2021 indicate that there were 28.3 million payrolled employees, a fall of 2.5% compared with the same period of the previous year and a decline of 730,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.3% in January 2021 - equivalent to 83,000 people.

Estimates for October to December 2020 show 32.39 million people aged 16 years and over in employment, 541,000 fewer than a year earlier. This was the largest annual decrease since May to July 2009.

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.

For people aged 16 years and over, for October to December 2020:

the estimated UK unemployment rate for all people was 5.1%; this is 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter

the estimated UK unemployment rate for men was 5.4%; this is 1.4 percentage points higher than a year earlier and 0.2 percentage points higher than the previous quarter

the estimated UK unemployment rate for women was 4.8%; this is 1.2 percentage points higher than a year earlier and 0.6 percentage points higher than the previous quarter

The single-month and weekly estimates of the unemployment rate suggest that the rate was largely flat through the October to December 2020 period.

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.

For people aged between 16 and 64 years, for October to December 2020:

the estimated economic inactivity rate for all people was 20.9%; this is up by 0.4 percentage points on the same period the previous year but largely unchanged on the quarter

the estimated economic inactivity rate for men was 17.3%; this is up by 1.2 percentage points on the same period the previous year and up by 0.3 percentage points on the quarter

the estimated economic inactivity rate for women was 24.5%; this is down by 0.4 percentage points on the same period the previous year and down by 0.3 percentage points on the quarter

Estimates for October to December 2020 show 8.66 million people aged between 16 and 64 years not in the labour force (economically inactive). This was 187,000 more than a year earlier and 2,000 more than the previous quarter.

Benefits

The Claimant Count decreased slightly in January 2021 to 2.6 million. This represents a monthly decrease of 0.8% but an increase of 109.4%, or 1.4 million, since March 2020.

The extracts are from the report by the Office for National Statistics published on 23 February 2021. See the full report at https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/february2021