A Labour Market Snapshot

12th March 2023

A group of academics at Edinburgh/Essex universities have taken the time to build a website a website dedicated to the evolution of the labour market post-Covid.

Just published is a Labour Market Snapshot.

This page presents a summary of the latest labour market data for the UK. As well as the usual data such as total Employment or the Unemployment Rate, we additionally focus on inactivity, vacancies, labour market flows, and mobility and reallocation across industries and occupations.

The results are constructed from the UK Labour Force Survey (LFS) dataset, which is the nationally-representative survey used to construct the official unemployment statistics. We use the latest available quarterly release, so our data run up to 2022 Quarter 4 (Oct-Dec).

Here is a brief summary of the current state of the UK labour market:

Total Employment remains around 250,000 workers below its pre-pandemic value, so the labour market is far from recovered despite the low Unemployment Rate. Employment is low because economic Inactivity is high. The recovery of employment seems to have stalled in the last quarter of data.

Worker Job Finding Rates from unemployment, employment, and inactivity are all high and have recovered from the lows experienced during lockdown. However, there is evidence of slowing in the last quarters, due to the global energy crisis. For the job-to-job transition rate, this might mean that the so-called Great Resignation might finally be coming to an end.

Aggregate Vacancies continue to fall and are 43% above their pre-pandemic level, slightly down from an all-time high a few quarters earlier. High vacancies are a source of the labour shortages plaguing the economy, and the Vacancy Filling Rate is now lower than it was before the pandemic. The economy is far off its usual Beveridge Curve, but is starting to return.

The probability that an employed worker becomes unemployed is starting to rise, so the risk of losing your job shows slight signs of increasing.

The rates at which workers transition from employment to another job, or to inactivity, are both elevated but starting to come down.
Gross Mobility across Industries and Occupations remains depressed. This means that fewer workers are changing industry or occupation when they move jobs, and are preferring to stay in jobs similar to their last job rather than making career moves.

Net Mobility across Industries and Occupations was high during the depths of the pandemic, but is now slowing down towards normal levels. If Net Mobility is high this means that some Industries/Occupations are growing by poaching workers from other Industries/Occupations which are shrinking.

The economy is thus settling down at a new composition of Industries and Occupations, with many sectors still much smaller than they were before the pandemic. In particular, the Manufacturing, Retail, and Construction industries have shrunk while Public Administration and high skilled service industries grew. Skilled Trades and Managerial occupations have shrunk while Professional and Administrative occupations grew.

Labour shortages continue to be a problem, both in the aggregate and for certain badly affected industries such as Manufacturing and Accommodation and Food. The worst hit industries are facing shortages not just due to high vacancies but also due workers not wanting to search for jobs in those industries.

The misallocation between the industries where firms are hiring and where workers are willing to work is now the worst it has been since our data began. The economy could be creating 20% more jobs per quarter if workers were willing or able to change the sectors they were searching in.

Read the full article HERE