Labour market overview, UK: February 2021

Estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK.

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Corrections

24 February 2021 15:01

The quarterly change in employment level in Table 1 has now been corrected. An error was also made in the country of birth and nationality table (8.1) within the PDF of this release. These figures were correct elsewhere in the release.

We apologise for any inconvenience.

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Notices

23 February 2021

The effect of the coronavirus (COVID-19) pandemic on our capacity means we have reviewed the existing labour market releases and have suspended some publications.

This will protect the delivery and quality of our remaining labour market outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus. More details about the impact on labour market outputs can be found in our statement.

This is an accredited National Statistic. Click for information about types of official statistics.

Contact:
Email Debra Leaker

Release date:
23 February 2021

Next release:
23 March 2021

2. Main points

Since February 2020, the number of payroll employees has fallen by 726,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic, with the latest two months recording small increases. New analysis by age band shows that the 18 to 24 years age group has seen the greatest decrease in payrolled employees since February 2020.

Data from our Labour Force Survey (LFS) shows the unemployment rate continued to increase, while the employment rate continued to fall. Although total hours worked continued to increase from the low levels in the previous quarter, this increase slowed in the latest quarter. The number of people temporarily away from work has fallen since its peak in April and May 2020, although it has increased slightly in November and December. The number of people away from work because of the pandemic and receiving no pay has also fallen since the start of the pandemic but risen slightly over the last two months.

The number of job vacancies in November 2020 to January 2021 was 26% lower than a year ago. This is an improvement on the position in summer 2020 when vacancies were down by nearly 60% year on year, but the rate of improvement has slowed in the past few months. Further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry. 

Annual growth in average employee pay continued to strengthen; the growth is driven in part by compositional effects of a fall in the number and proportion of lower-paid employee jobs, and by increased bonuses, which had been postponed earlier in the year.

  • In January 2021, 83,000 more people were in payrolled employment when compared with December 2020; this is the second consecutive monthly increase.

  • In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020.

  • The UK employment rate, in the three months to December 2020, was estimated at 75.0%, 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.

  • The UK unemployment rate, in the three months to December 2020, was estimated at 5.1%, 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.

  •  The redundancy rate, in the three months to December 2020, was estimated at 12.3 people per thousand employees.

  • The Claimant Count increased in January 2021, to 2.6 million; this includes both those working with low income or hours, and those who are not working.

  •  There were an estimated 599,000 vacancies in the UK in November 2020 to January 2021; this is 211,000 fewer than a year ago and 64,000 more than the previous quarter.

  •  Growth in average total pay (including bonuses) among employees for the three months October to December 2020 increased to 4.7%, and growth in regular pay (excluding bonuses) also increased to 4.1%.

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3. Pay As You Earn Real Time Information

Experimental data on the number of payroll employees and median earnings, using HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI), also show current labour market conditions.

Early estimates for January 2021 indicate that there were 28.3 million payrolled employees, a fall of 2.5% compared with the same period of the previous year and a decline of 730,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.3% in January 2021 - equivalent to 83,000 people.

In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020; 425,000 (58.5%) were aged under 25 years.

Early estimates for January 2021 indicate that median monthly pay decreased to £1,923, an increase of 4.0% compared with the same period of the previous year.

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4. Employment, unemployment and economic inactivity

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Labour Force Survey (LFS) responses are weighted to official population projections. As the current projections are 2018-based they are based on demographic trends that pre-date the COVID-19 pandemic. We are analysing the population totals used in the weighting process and may make adjustments if appropriate. Rates published from the LFS remain robust; however, levels and changes in levels should be used with caution. This will particularly affect estimates for country of birth, nationality, ethnicity and disability.

Figure 2: In the three months to December, the unemployment rate continued to increase while the employment rate continued to fall

UK employment, unemployment and economic inactivity rates, seasonally adjusted, between October to December 2005 and October to December 2020

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Employment

Employment measures the number of people aged 16 years and over in paid work and those who had a job that they were temporarily away from. The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

For people aged between 16 and 64 years, for October to December 2020:

  • the estimated employment rate for all people was 75.0%; this is 1.5 percentage points down on the same period the previous year and 0.3 percentage points down compared with the previous quarter (July to September 2020)

  • the estimated employment rate for men was 78.2%; this is 2.4 percentage points down on the same period the previous year and 0.4 percentage points down on the quarter

  • the estimated employment rate for women was 71.8%; this is 0.6 percentage points down on the same period the previous year and 0.1 percentage points down on the quarter

Estimates for October to December 2020 show 32.39 million people aged 16 years and over in employment, 541,000 fewer than a year earlier. This was the largest annual decrease since May to July 2009.

The single-month and weekly estimates of the employment rate suggest that the rate was lower towards the end of the three-month period.

Estimates of the number of people in employment on the Labour Force Survey (LFS) are consistent with the International Labour Organization (ILO) definition of employment. Under this definition, employment includes both those who are in work during the reference period and those who are temporarily away from a job. The number of people who are estimated to be temporarily away from work includes furloughed workers, those on maternity or paternity leave and annual leave.

Prior to the coronavirus (COVID-19) pandemic, there were on average 2 to 2.5 million people temporarily away from work. Experimental estimates based on returns for individual weeks show that the number of people temporarily away from work rose to around 7.9 million people in April 2020. The number of people temporarily away from work has fallen since its peak in April and May 2020, although it has increased slightly in November and December. There were also around 307,000 people away from work because of the pandemic and receiving no pay in December 2020; this has increased slightly since November 2020 but has fallen from around 658,000 in April 2020.

The Opinions and Lifestyle (OPN) Survey shows that the proportion of respondents to the survey who had been asked to take furlough leave increased from 5% in the period 28 October to 1 November 2020 to 10% in the period 10 to 13 December 2020.

According to the Business Impact of Coronavirus Survey (BICS), the proportion of businesses' workforce on furlough increased by 11 percentage points to 18% between October 2020 and January 2021. Further, BICS Wave 23 (for the period 11 to 24 January 2021), showed that the arts, entertainment and recreation industry had the highest percentage of furloughed workers, at 59%, followed by the accommodation and food service activities industry, at 51%. 

Unemployment

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 unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

For people aged 16 years and over, for October to December 2020:

  • the estimated UK unemployment rate for all people was 5.1%; this is 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter

  • the estimated UK unemployment rate for men was 5.4%; this is 1.4 percentage points higher than a year earlier and 0.2 percentage points higher than the previous quarter

  • the estimated UK unemployment rate for women was 4.8%; this is 1.2 percentage points higher than a year earlier and 0.6 percentage points higher than the previous quarter

The single-month and weekly estimates of the unemployment rate suggest that the rate was largely flat through the October to December 2020 period.

Economic inactivity

Economic inactivity measures people without a job but who are not classed as unemployed because they have not been actively seeking work within the last four weeks and/or they are unable to start work within the next two weeks. Our headline measure of economic inactivity is for those aged between 16 and 64 years.

For people aged between 16 and 64 years, for October to December 2020:

  • the estimated economic inactivity rate for all people was 20.9%; this is up by 0.4 percentage points on the same period the previous year but largely unchanged on the quarter

  • the estimated economic inactivity rate for men was 17.3%; this is up by 1.2 percentage points on the same period the previous year and up by 0.3 percentage points on the quarter

  • the estimated economic inactivity rate for women was 24.5%; this is down by 0.4 percentage points on the same period the previous year and down by 0.3 percentage points on the quarter

Estimates for October to December 2020 show 8.66 million people aged between 16 and 64 years not in the labour force (economically inactive). This was 187,000 more than a year earlier and 2,000 more than the previous quarter.

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5. Hours worked

Between July to September 2020 and October to December 2020, total actual weekly hours worked in the UK saw an increase of 53.7 million, or 5.8%, to 978.7 million hours (Figure 3).

Average actual weekly hours worked saw an increase of 1.8 hours on the quarter to 30.2 hours.

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6. Redundancies

The redundancy estimates measure the number of people who were made redundant or who took voluntary redundancy in the three months before the Labour Force Survey interviews; it does not take into consideration planned redundancies. So, in this release, the latest estimates may relate to redundancies over the period from the beginning of August to the end of December 2020.

Reports of redundancy in the three months prior to interview increased in October to December 2020 by 8.4 per thousand on the year to 12.3 per thousand employees (Figure 4).

Experimental weekly Labour Force Survey (LFS) estimates show that the number of people reporting redundancy in the three months prior to interview had been increasing since June 2020 (peaking in September) and remains high but has fallen in December 2020.

The Business Impact of Coronavirus Survey (BICS) Wave 23 reported that 3.4% of surveyed businesses expected to make redundancies within the following three months across all industries. This was a slight increase compared with the 3.1% reported in Wave 22 (reference period 28 December 2020 to 10 January 2021).

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7. Claimant Count (Experimental Statistics)

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The Claimant Count is not a measure of unemployment. Changes in the Claimant Count will not be wholly because of changes in the number of people who are unemployed. There is more detail available in the Glossary.

The Claimant Count decreased slightly in January 2021 to 2.6 million. This represents a monthly decrease of 0.8% but an increase of 109.4%, or 1.4 million, since March 2020.

More detail on the Claimant Count can be found in the Employment in the UK bulletin.

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8. Vacancies

In November 2020 to January 2021, there were an estimated 599,000 vacancies, which is a quarterly increase of 64,000 vacancies.

Figure 6 relates to three-month averages, which naturally involve some time lag. Insight to trends in January 2021 alone is provided by two experimental sources, which both indicate that the trend in vacancies was broadly similar through each of the months of November, December and January.

Single-month vacancy estimates, available in Dataset X06, indicate that there were 26% fewer vacancies in January 2021 than in January 2020, which is a similar annual percentage difference to those witnessed in each of the previous three months. Adzuna Online job advert estimates in the Coronavirus and the latest indicators for the UK economy release show a similar picture.

The KPMG and REC, UK Report on Jobs (PDF, 683KB) for February 2021 highlighted an overall decline in vacancies, and an increase of the supply of candidates across all industries in January. However, the rate of increase in the supply of candidates eased to a 10-month low. The slowdown was driven by softer expansion in both permanent and temporary candidate numbers. Recruiters frequently mentioned that redundancies had increased staff supply while greater uncertainty over the economic outlook had reduced the appetite for job moves.

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9. Earnings growth

In October to December 2020, the rate of annual pay growth was positive 4.7% for total pay and positive 4.1% for regular pay.

The rate of total and regular pay growth had stood at 2.8% and 2.9% respectively in December 2019 to February 2020 immediately prior to any impact from the coronavirus (COVID-19) pandemic was seen; it then slowed sharply in April to June 2020 to negative 1.3% for total pay and negative 0.1% for regular pay before some increase between July and December. The higher percentage growth figure for total pay reflected an increase in bonus payments, because of bonus payments being postponed from earlier in the year.

In real terms, total pay is now growing at a faster rate than inflation, at positive 3.8%, and regular pay growth in real terms is also positive, at 3.3%.

Between October to December 2019 and October to December 2020, average pay growth varied by industry sector. The finance and business services sector saw the highest estimated growth in total pay, at 6.8%. All sectors saw positive growth, although construction (1.9%) and manufacturing (1.5%) had smaller growth than the other sectors. This is an improvement on the growth rates in April to June 2020, the three-month period with the biggest falls in average pay, when all these sectors except for the public sector had negative growth rates.

Although we are seeing a compositional effect, there is still an underlying pay growth that is estimated to be around 3%. This is also supported by the recent growth of aggregate pay (total amount paid across all employees), as shown by the Earnings and employment from Pay As You Earn Real Time Information (RTI), UK: February 2021 data.

In December 2020, aggregated pay increased by 3.3% compared with December 2019. As noted earlier RTI data have showed a decrease in the number of employees paid via payroll, so this decrease and the increase in aggregate pay growth indicate some underlying average pay growth.

The KPMG and REC, UK Report on Jobs (PDF, 683KB) for February 2021 indicated that recruitment consultancies found renewed downward pressure on UK pay in January. This was evidenced by a fall in starting salaries and temporary wages in January after increasing in December 2020.

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10. Coronavirus and measuring the labour market

The data presented in this bulletin are collected from various sources. Each cover different reference periods or count dates and are therefore affected differently by the coronavirus (COVID-19) social distancing and lockdown measures.

Figure 8 shows the data reported in this bulletin (dark bars) alongside their different reference periods and count dates (white text). The main coronavirus dates are included to show how much of the data presented were affected by the implementation of coronavirus social distancing and lockdown measures.

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Coronavirus and Labour Force Survey estimates

Because of the coronavirus and the suspension of face-to-face interviewing on 17 March 2020, we had to make operational changes to the Labour Force Survey (LFS), particularly in the way that we contact households for initial interview, which moved to a "by telephone" approach. These changes resulted in a response where certain characteristics have not been as well represented as previously and is evidenced in a change in the balance of type of household that we are reaching. In particular, the proportion of households where people own their homes in the sample has increased and rented accommodation households has decreased.

To mitigate the impact of this non-response bias, in October 2020, we introduced housing tenure into the LFS weighting methodology for periods from January to March 2020 onwards. While not providing a perfect solution, this redressed some of the issues that had previously been noted in the survey results. More information can be found in Coronavirus and its impact on the Labour Force Survey and in this blog.

The change in weighting methodology resulted in revisions to all LFS estimates published on 13 October 2020 for the periods January to March 2020 through to May to July 2020 and consequently had an impact on recent movements for a number of the published series. More information about the impact of the change in weighting on main LFS indicators published in October 2020 can be found in Dataset X08.

LFS responses are weighted to official population estimates and projections that do not currently reflect the impact of the coronavirus pandemic. The LFS is not designed to measure changes in the levels of population or long-term international migration. We are analysing the population totals used in the weighting process and may make adjustments if appropriate. Rates published from the LFS remain robust and reliable, however levels and changes in levels should be used with caution.

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11. Labour market data

Summary of labour market statistics
Dataset A01 | Released 23 February 2021
Estimates of employment, unemployment and other employment-related statistics for the UK.

Employment, unemployment and economic inactivity
Dataset A02 SA | Released 23 February 2021
Estimates of UK employment, unemployment and economic inactivity for people aged 16 years and over and people aged between 16 and 64 years based on the Labour Force Survey (LFS).

Average weekly earnings
Dataset EARN01 | Released 23 February 2021
Estimates of Great Britain earnings growth based on the Monthly Wages and Salaries Survey.

Vacancies by industry
Dataset VACS02 | Released 23 February 2021
Estimates of the number of UK job vacancies for each industry, based on a survey of businesses.

Real Time Information statistics
Dataset Real Time Information statistics | Released 23 February 2021
Earnings and employment statistics from Pay As You Earn (PAYE) Real Time Information (RTI) (Experimental Statistics) seasonally adjusted.

Claimant Count
Dataset CLA01 | Released 23 February 2021
Experimental estimates of the Claimant Count including Jobseeker's Allowance and out of work Universal Credit claimants.

Labour Force Survey weekly estimates
Dataset X07 | Released 23 February 2021
LFS weekly estimates of employment, unemployment, economic inactivity and hours in the UK. All estimates are calculated from highly experimental weekly LFS datasets.

Labour Force Survey single month estimates
Dataset X01 | Released 23 February 2021

Labour Force Survey (LFS) experimental single-month estimates of employment, unemployment and economic inactivity.

View all related data on the related data page. Alternatively, Nomis provides free access to the most detailed and up-to-date UK labour market statistics from official sources.

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12. Glossary

Average weekly earnings

Average weekly earnings measures money paid by employers to employees in Great Britain before tax and other deductions from pay. The estimates are not just a measure of pay rises as they also reflect, for example, changes in the overall structure of the workforce. More high-paid jobs in the economy would have an upward effect on the earnings growth rate.

Economic inactivity

People not in the labour force (also known as economically inactive) are not in employment but do not meet the internationally accepted definition of unemployment because they have not been seeking work within the last four weeks and/or they are unable to start work in the next two weeks. The economic inactivity rate is the proportion of people aged between 16 and 64 years who are not in the labour force.

Employment

Employment measures the number of people in paid work or who had a job that they were temporarily away from (for example, because they were on holiday or off sick). This differs from the number of jobs because some people have more than one job. The employment rate is the proportion of people aged between 16 and 64 years who are in employment. A more detailed explanation is available in A guide to labour market statistics.

Unemployment

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 unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

Vacancies

Vacancies are defined as positions for which employers are actively seeking recruits from outside their business or organisation. The estimates are based on the Vacancy Survey; this is a survey of businesses designed to provide estimates of the stock of vacancies across the economy, excluding agriculture, forestry and fishing (a small sector for which the collection of estimates would not be practical).

Claimant Count

The latest Claimant Count statistics relate to 10 December 2020.

The Claimant Count seeks to measure the number of people claiming benefit principally for the reason of being unemployed.

The Claimant Count has generally been a count of the appropriate benefits within the UK's current benefit regime that best meet that criteria, and therefore sensitive to any changes in the benefit regime. Currently, this is a combination of claimants of Jobseeker's Allowance (JSA) and claimants of Universal Credit (UC) who fall within the UC "searching for work" conditionality.

Those claiming unemployment-related benefits (either JSA or in the UC searching for work conditionality group) may be:

  • wholly unemployed and searching for work
  • employed but with low income and/or low hours, that make them eligible for unemployment-related benefit support
  • under certain circumstances, not required to seek work and therefore economically inactive

UC, which has been rolled out to replace the previous income-based element of JSA, along with a range of other income-based benefits, is designed to be a broader benefit, covering more people with underlying eligibility than those who claimed JSA. As a household benefit, the holistic situation of all members of the household are considered, and their obligations to look for work considered. Therefore, the roll-out itself has caused notable changes to the level of the Claimant Count, significantly closing the previously existing gap between the count and unemployment levels. Consequently, the measure is currently an Experimental statistic, as movements are not wholly caused by changes in the labour market.

Enhancements to UC as part of the UK government's response to the coronavirus mean that an increasing number of people became eligible for unemployment-related benefit support, although still employed. Consequently, changes in the Claimant Count will not be wholly because of changes in the number of people who are unemployed. We are not able to identify to what extent people who are employed or unemployed have affected the numbers.

Pay As You Earn (PAYE) Real Time Information (RTI)

These data come from HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI) system. They cover the whole population rather than a sample of people or companies, and they will allow for more detailed estimates of the population. The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. As a result, the series are subject to revisions.

PAYE is the system employers and pension providers use to take Income Tax and National Insurance contributions before they pay wages or pensions to employees and pensioners. This publication relates to employees only and not pensioners.

A more detailed glossary is available.

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13. Measuring the data

The employment, unemployment and economic inactivity estimates rely on data collected from the Labour Force Survey (LFS), a survey run by field interviewers with people across the UK every month.

The LFS performance and quality monitoring reports provide data on response rates and other quality-related issues for the LFS, including breakdowns of response by LFS wave, region and question-specific response issues. The average weekly earnings and vacancies estimates rely on data collected from surveys of employers.

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the following QMI reports:

Coronavirus

For more information on how labour market data sources are affected by the coronavirus (COVID-19) pandemic, see the article published on 6 May 2020, which details some of the challenges that we have faced in producing estimates at this time.

An article published 11 December 2020 compares our labour market data sources and discusses some of the main differences.

Our latest data and analysis on the impact of the coronavirus on the UK economy and population are available on our dedicated coronavirus web page. This is the hub for all special coronavirus-related publications, drawing on all available data. In response to the developing coronavirus pandemic, we are working to ensure that we continue to publish economic statistics. For more information, please see COVID-19 and the production of statistics.

End of EU exit transition period

As the transition period ends and the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, the Office for National Statistics (ONS) is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available early this year.

We will continue to produce our labour market statistics in line with the UK Statistics Authority's Code of Practice for Statistics and in accordance with International Labour Organization (ILO) definitions and agreed international statistical guidance.

Future publication dates

23 March 2021

20 April 2021

18 May 2021

15 June 2021

15 July 2021

17 August 2021

Sampling variability

Notes

  1. The sampling variability estimates are for 95% confidence intervals and are calculated on data that are not seasonally adjusted.
  2. These data are part of data table A11: Labour Force Survey sampling variability, which is part of the Labour market overview, UK release.

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14. Strengths and limitations

Some of the figures in this bulletin come from surveys, which gather information from a sample rather than from the whole population. The sample is designed to be as accurate as possible given practical limitations such as time and cost constraints. Therefore, the estimates presented in this bulletin contain some uncertainty and are not precise figures. This can have an impact on how changes in the estimates should be interpreted, especially for short-term comparisons.

As the number of people available in the sample gets smaller, the variability of the estimates that we can make from that sample size gets larger. Estimates for small groups (for example, unemployed people aged between 16 and 17 years), which are based on small subsets of the Labour Force Survey (LFS) sample, are less reliable and tend to be more volatile than for larger aggregated groups (for example, the total number of unemployed people).

In general, changes in the numbers (and especially the rates) reported in this bulletin between three-month periods are small and are not usually greater than the level that can be explained by sampling variability. Short term movements in reported rates should be considered alongside longer-term patterns in the series and corresponding movements in other sources to give a fuller picture.

Further information is available in A guide to labour market statistics.

Where to find data about uncertainty and reliability

Dataset A11 shows sampling variabilities for estimates derived from the LFS.

Sampling variability information for average weekly earnings growth rates is available from the "Sampling Variability" worksheets within Datasets EARN01 and EARN03. The sampling variability of the three-month average vacancies level is around plus or minus 1.5% of that level. Information on revisions is available in the Labour market statistics revisions policy.

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Contact details for this Statistical bulletin

Debra Leaker
labour.market@ons.gov.uk
Telephone: +44 (0)1633 455400