The UK labour market continues to evolve amid economic shifts and the ongoing impact of the COVID-19 pandemic. Despite indications of growth on the year from the latest period, ranging from 0.5% for Labour Force Survey (LFS) employment, up to 1.2% for employee jobs, according to September 2024’s Labour Market Report, the medium-term picture for annual growth has been more mixed. This article takes a deeper look into the trends to offer an understanding of the latest data and their implications. It must be acknowledged that increased volatility of LFS estimates, resulting from smaller achieved sample sizes, means that estimates of change should be treated with additional caution.
Trends and considerations: A comparative overview
Approaching September 2024, the labour market has presented a mixed picture. The estimated number of vacancies in the UK decreased by 42,000 on the quarter to 857,000. Despite this being the 26th consecutive period of vacancy reduction, vacancies are still above pre-coronavirus (COVID-19) pandemic levels.
The report explains that the total annual growth in employees’ average earnings (5.1% excluding bonuses 4.0% including bonuses) in Great Britain is affected by the NHS and civil service one-off payments made in June and July 2023.
Latest data: employment, unemployment, and earnings
Despite the indication of resilience in last month’s report, the estimation for payrolled employees in the UK has decreased by 6,000 between June and July 2024. Furthermore, the early estimate of payrolled employees for August 2024 decreased by 59,000 (negative 0.2%) on the month. However, compared to last year it increased by 122,000 (0.4%) implying a gradual recovery in the employment landscape. Notably, the August 2024 estimate should be treated as a provisional estimate and is likely to be revised when more data is acquired next month.
The UK’s employment rate for people aged 16 to 64 years was estimated at 74.8% in the May to July 2024 period. While this is an improvement over the previous quarter, it remains below the levels seen a year ago. Similarly, the unemployment rate has decreased both on the quarter and on the year, now standing at 4.1%.
The UK economic inactivity rate (for people aged 16 to 64 years) was estimated at 21.9% in May to July 2024, above estimates of a year ago, but decreased in the latest quarter, reflecting ongoing challenges in re-engaging certain segments of the workforce.
Key Indicators at a Glance:
Job Vacancies: Vacancies decreased on the quarter but are above pre-pandemic levels.
Nominal Earnings: In May to July 2024, both regular and total annual growth rates are lower than the previous three-month period.
Real Earnings: As inflation has reduced, real growth rates have increased on the year.
Payrolled Employees: The number of payrolled employees is now well above pre-pandemic levels.
Employment Rate: The employment rate is up on the quarter but down on the year, and is still below pre-pandemic rates
Unemployment Rate: The unemployment rate is down on the quarter and down on the year, but above pre-pandemic rates.
Inactivity Rate: The economic inactivity rate is down on the quarter but up on the year, and still above pre-pandemic rates.
Conclusion
The September 2024 Labour Market Report paints a complex picture of the UK’s employment landscape. While there are signs of resilience, with increases in payrolled employees and improved real earnings growth compared to last year, challenges remain, particularly in terms of economic inactivity and unemployment which are both still above pre-pandemic rates. As the labour market continues to navigate post-pandemic realities, these trends will be crucial in shaping policy responses and guiding businesses and workers alike in the months ahead.
The relationship between these indicators confirms the necessity for a holistic view of the labour market dynamics, especially considering the current economic uncertainty. Policymakers and stakeholders must remain vigilant, utilising a broad range of data to inform decisions that will support a resilient and inclusive recovery.
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