The Office for National Statistics' (ONS') new faster indicators show that the coronavirus (COVID-19) has had large-scale impacts on the UK labour market.
Of the businesses that responded that they continued trading during the second wave of the Business Impact of Coronavirus (COVID-19) Survey (BICS) (in the period 23 March to 5 April 2020), 41% reported having to reduce staff levels in the short term while 29% reported having to decrease working hours.
In the period December 2019 to February 2020, employment increased by 352,000 to a record high of 33.07 million and unemployment increased by 22,000 to 1.36 million.
The number of people who were economically inactive fell by 166,000 to 8.37 million, leading to a record low inactivity rate of 20.2%.
In the year to February 2020, total average weekly nominal pay (which includes bonuses) grew by 2.8% to £545 and regular average weekly nominal pay (which excludes bonuses) grew by 2.9% to £511.
Following a review of our outputs over recent months, the way we publish our labour market content is changing. From May 2020, the labour market economic commentary will no longer be published as an individual publication. Instead, economic commentary will be included in the monthly labour market overview.
This is intended to streamline the number of publications we produce, making it clearer and simpler for users to find economic context for the main labour market data. In addition, more detailed economic analysis of labour market data will be published on a quarterly basis starting in May 2020. We welcome feedback on these changes via email at firstname.lastname@example.org.Back to table of contents
The strong performance of the labour market in the UK continued in the year to December 2019 to February 2020 as the level of employment increased to a record high while inactivity continued to decline, reaching another record low. However, the unemployment level increased by 22,000 to 1.36 million in this period.
In the year to February 2020, average weekly earnings growth weakened. Total pay (which includes bonuses) grew by 2.8% to £545 and regular pay (which excludes bonuses) grew by 2.9% to £511. Slowing wage growth preceded a period of significant labour market changes caused by the coronavirus (COVID-19) pandemic.
On 23 March 2020, the UK government reacted to the pandemic by introducing measures to restrict the spread of the virus (for example, the prohibition of non-essential travel and social distancing). The government introduced the Coronavirus Job Retention Scheme (CJRS) to protect employees who lose their jobs because of COVID-19. It also introduced a separate scheme, the Self-employment Income Support Scheme (SEISS), to support self-employed workers who have lost income because of COVID-19. The impacts of the pandemic and of the interventions are not yet showing in the latest labour market statistics.
Even though the impacts of the pandemic and the responses are not yet showing in the latest employment numbers, there were already indications that firms were less confident about increasing employment in Quarter 1 (Jan to Mar) 2020. The Bank of England Agents' summary of business conditions for Quarter 1 2020 highlighted that many firms had put recruitment plans on hold in Quarter 1 2020, with only food distributors reporting an increase in staff. In the manufacturing sector, firms in automotive, aerospace and machinery industries were shutting down, introducing shorter working hours and making workers redundant.
The latest KPMG and REC, UK Report on Jobs, for March 2020, reported that permanent and temporary placements have both fallen at their fastest rate since 2009, with firms either postponing or cancelling plans to take on new staff. The deteriorating employment environment was also highlighted by the latest IHS Markit and CIPS Flash UK Composite Purchasing Managers' Index (PMI), which signalled a rapid deterioration for employment across the private sector, with manufacturing and services most affected.Back to table of contents
Employment continued its strong upward trend in the year to December 2019 to February 2020. The level of employment increased by 352,000 in this period to a record high of 33.07 million. This corresponded to a 0.4 percentage point increase in the employment rate to a record high of 76.6%.
The recent growth in employment in the UK driven by women, who accounted for over 90% of the total increase in the employment level in the year to December 2019 to February 2020. The number of women in employment increased by 318,000 over the same period. The remainder consisted of men who increased by 34,000.
In the year to December 2019 to February 2020, growth in full-time employment was stronger than that of part-time employment. The total number of people working full time increased by 309,000 to 24.5 million and that of part-time workers decreased by 43,000 to 8.6 million.
From late 2016 onwards, the growth of part-time employment slowed and remained relatively level (Figure 5). The growth of full-time employment has been increasing robustly. The strong growth rate of full-time employment indicates a high demand for labour in the UK economy in this period.
In the year to December 2019 to February 2020, the level of unemployment increased by 22,000 to 1.36 million. This was the second consecutive annual increase and was driven by the rising number of unemployed men (increasing by 32,000 to 763,000) compared with a decrease in the number of unemployed women (decreasing by 10,000 to 601,000). The December 2019 to February 2020 figures showed the largest increase in the level of unemployment for men since March to May 2012.
The unemployment rate was largely unchanged on the year, remaining at 4.0%. The unemployment rate for men rose by 0.2 percentage points on the year to 4.2% and that for women fell by 0.1 percentage points to 3.7%%. Figure 6 shows the growing divergence in the trends of unemployment rates for men and women.
The unemployment rates for men and women have been diverging since May to July 2018 (Figure 6). That was the time when both rates were equal to 4.0%. The divergence has been particularly clear from early 2019 onwards, indicating that men have been driving the recent increase in the unemployment rate.
The level of economic inactivity decreased by 166,000 to 8.37 million in the year to December 2019 to February 2020.
The inactivity rate fell by 0.4 percentage points to a record low of 20.2%. The decreases in both the level and rate of inactivity were driven by women.
In the year to December 2019 to February 2020, the number of women who were economically inactive fell by 157,000 to a record low of 5.09 million. The economic inactivity rate for women decreased by 0.8 percentage points to a record low of 24.5%. In comparison, the number of men who were economically inactive only fell by 9,000 to 3.28 million, and the economic inactivity rate reduced by 0.1 percentage points to 15.9%.
Disaggregating the number of economically inactive people by age shows that the age group 50 to 64 years made up 17.0% of all inactive people. People aged 65 years and over made up 56.0% of the total. The inactivity rates for these age groups fell in the year to December 2019 to February 2020, with that for the 50 to 64 years age group decreasing by 0.4 percentage points to 25.2% and that for the 65 years and over age group decreasing by 0.8 percentage points to 88.2%. Both age groups' inactivity rates reached record low rates in the three months to February 2020.Back to table of contents
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