HR is very wish-washy sometimes. Sometimes it’s best to turn to the stats. And the latest data suggests the labour market is continuing to recover. This data, of course, covers months when the market was still supported by the furlough scheme (ended end-September) – and the “true” demand for labour can only be judged when comparable data starts coming through for October onwards. But, according to the Insolvency Service, there seemed to be little evidence of large-scale redundancies on the ending of the furlough scheme (as well as anecdotal evidence from outplacement firm Risesmart).
Firstly, early estimates from Pay As You Earn Real Time Information (PAYE RTI, HMRC data) showed the number of payroll employees increased by 207,000 to a record 29.2mn in September, exceeding precoronavirus pandemic (February 2020) levels. All regions except London and Scotland were above pre-coronavirus (COVID-19) (February 2020) levels.
Secondly, turning to the data for the three months to August (LFS data), employment increased in the quarter, while unemployment eased.
Employment rose by 183,000 (QOQ) to 32.42mn and was only 49,000 lower YOY, while the employment rate (the proportion of people aged 16-64 who were in work) was 75.3%, 0.5 percentage points higher QOQ and only 0.1pp lower YOY. Total actual hours worked increased strongly in the quarter, rising by 39.9mn hours (QOQ) to 1,021.3mn, to be 137.2mn higher YOY, with the relaxation of coronavirus restrictions. Partly corresponding to the rise in employment, unemployment fell by 126,000 (QOQ) to 1.51mn and was 33,000 lower YOY, while the unemployment rate slipped to 4.5% (0.4 percentage points lower QOQ and 0.1pp lower YOY). 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 inactivity rate (the proportion of people aged 16-64 who were economically inactive) was 21.1%, 0.2pp lower QOQ but still 0.2pp higher YOY, while the redundancy rate was similar to pre-coronavirus pandemic levels.
The ONS pointed out that young people (those aged 16 to 24 years) had been particularly affected by the pandemic, with the employment rate decreasing and the unemployment and economic inactivity rates increasing by more than seen for those aged 25 years and over. Over the last quarter, however, there had been a record increase in the employment rate and decreases in the unemployment and inactivity rates for young people.
UK vacancies rose by 239,000 (QOQ) in the three months to September to a record high of 1,102,000 and were 318,000 above their pre-pandemic January to March 2020 level. This was the second consecutive month that the three-month average for UK vacancies has been over one million. All industry sectors were above or equal to their January to March 2020 pre-pandemic levels in July to September 2021, with accommodation and food service activities increasing the most, by nearly 50,000 (59%). The experimental single-month vacancy estimates recorded almost 1.2mn in September 2021, which was also a record high. The existence of increasing vacancies, and various indicators of recruitment difficulties, points to labour market mismatches as the economy recovers. As the minutes of the MPC’s September meeting noted “…uncertainty around the labour market outlook had increased. Key questions included how the economy will adjust to the closure of the furlough scheme at the end of September; the extent, impact and duration of any change in unemployment; as well as the degree and persistence of any difficulties in matching available jobs with workers”.
Annual growth in average total pay (including bonuses) was 7.2% and regular pay (excluding bonuses) was 6.0% among employees for the three months to August 2021. There are particular bonus brightspots. An examination of the current tech jobs market from one tech recruiter concluded the UK’s tech bonus pot will increase massively in 2021 – Randstad forecasts that it is set to top £1bn this year, up from £664m in 2020.
In real terms, total and regular pay are growing at a faster rate than inflation, at 4.7% for total pay and 3.4% for regular pay. But the average real-pay growth rates are being affected by the base and compositional effects and should be interpreted with caution. Average total pay growth for the private sector was 8.3% in the three months to August 2021, while for the public sector it was 2.5%. Since the end of 2019, the public sector generally had stronger growth than the private sector, but since April 2021, the year-on-year comparison with a low base period has meant the private sector now shows stronger growth. All sectors saw positive growth, including all the industry groups within each sector.
HR doesn’t need fluff – the numbers are reason enough to feel cheerful!
