Redundancies
The concept of redundancies falls on the demand side of the labour market framework.
Redundancies occur when an employee leaves a job because the position no longer exists or it ceases to exist in the place where the employee worked. This may be the result of a fall in an organisation's employment requirements, a restructuring of the organisation, or a combination of both.
Redundancies can be either voluntary or involuntary. Employees take voluntary redundancy when they agree to leave a post that is being removed from the workforce. In contrast, involuntary redundancy is when the job loss is forced upon an employee. Both types of redundancy may include some form of payment or time off in lieu as compensation.
The level and rate of redundancies are important measures of changes in labour demand. When coupled with changes in total employment, they provide an indication of the overall health of the labour market. However, redundancies may be concentrated in particular sectors of the economy, suggesting that economic restructuring is taking place. For example, the decline in manufacturing has been accompanied by relatively high redundancy rates in that sector of industry.
Redundancy levels and rates are available from the Labour Force Survey (LFS) every month on a three-month rolling average basis. These are published in the Labour Market Statistics First Release. These figures have been seasonally adjusted and have also taken the latest population estimates into account.
Estimates of the number of redundancies by industry group are also available and will be updated on a quarterly basis. Additional information available from the LFS includes re-employment rates, redundancies by region, reasons for redundancy and those in receipt of redundancy payments.
Redundancies are defined in the LFS as those who had been made redundant in the month of the reference week or in the two calendar months prior to this. The redundancy figures include both those who were not in employment during the reference week, and those who were in employment and had started their new job in the month of the reference week or in the previous two calendar months.
Redundancy rates measure the number of redundancies per thousand employees. The estimates for the number of employees are obtained from data in the previous quarter (for example, spring quarter redundancy estimates use the number of employees in the winter quarter). These data exclude the self-employed.
The choice of denominator for redundancy rates relies on two assumptions. First, although a few self-employed are recorded as having been made redundant, it is assumed that, in general, redundancy only applies to employees. The difference made by including the self-employed in the numerator falls within sampling variability.
Second, because of the question design, the data collected in, for example, spring refers to redundancies that occurred in winter and spring. The Office for National Statistics (ONS) uses the data from the previous quarter for the denominator on the basis that redundancies are decided in advance.
