Labour market overview, UK: April 2021

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

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Contact:
Email Debra Leaker

Release date:
20 April 2021

Next release:
18 May 2021

2. Main points

The latest figures suggest that the jobs market has been broadly stable in recent months.

After a few months of increases, there was a small monthly decrease in the number of payrolled employees in March 2021. The largest monthly falls were seen at the start of the coronavirus (COVID-19) pandemic. Over the year, the largest falls in payrolled employment have been in the hospitality sector, among those aged under 25 years, and among those living in London.

Data from our Labour Force Survey (LFS), for the three months to February 2021, are little changed on the quarter. Estimates show a small quarterly decrease in the unemployment rate while the economic inactivity rate increased, as it did during the first coronavirus restrictions; the employment rate continued to fall. With the reintroduction of many coronavirus restrictions, total hours worked decreased on the quarter.

The number of job vacancies in January to March 2021 fell by nearly 23% on the year; arts, entertainment and recreation, and accommodation and food service activities continue to be the worst affected. Growth in the number of vacancies has slowed this quarter although experimental single-month statistics indicate a strong increase in March and experimental statistics of online job adverts provided by Adzuna suggest a potential acceleration into April. The slowing down in the rate of recovery for job vacancies to March 2021 is more evident among smaller companies.

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.

  • 56,000 fewer people were in payrolled employment in March 2021 when compared with February 2021.

  • The UK employment rate was estimated at 75.1%, 1.4 percentage points lower than a year earlier and 0.1 percentage points lower than the previous quarter.

  • The UK unemployment rate was estimated at 4.9%, 0.9 percentage points higher than a year earlier but 0.1 percentage points lower than the previous quarter.

  • The UK economic inactivity rate was estimated at 20.9%, 0.7 percentage points higher than a year earlier and 0.2 percentage points higher than the previous quarter.

  • The total number of weekly hours worked was 959.9 million, down 92.3 million hours on the same period the previous year and down 20.1 million hours compared with the previous quarter.

  • There were an estimated 607,000 job vacancies in January to March 2021, which is a 22.7% fall compared with a year ago.

  • Growth in average total pay (including bonuses) among employees for the three months December 2020 to February 2021 was 4.5%, and growth in regular pay (excluding bonuses) was 4.4%; it is estimated that by removing the compositional effect, the underlying wage growth is around 2.5% for total and regular pay.

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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 March 2021 indicate that there were 28.2 million payrolled employees (Figure 1), a fall of 2.8% compared with the same period of the previous year and a decline of 813,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees decreased by 0.2% in March 2021 - equivalent to 56,000 people.

Of the 813,000 decrease in payrolled employees since March 2020:

  • 355,000 can be attributed to employees working in the accommodation and food service activities sector

  • 223,000 can be attributed to employees living in London

  • 436,000 (53.7%) were under 25 years

Early estimates for March 2021 indicate that median monthly pay increased to £1,945, an increase of 5.4% compared with the same period of the previous year.

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4. Employment, unemployment and economic inactivity

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LFS responses are weighted to official 2018-based population projections on demographic trends that pre-date the coronavirus pandemic. In our Coronavirus and the impact on payroll employment article we analyse the population totals used in the LFS weighting process and state our intention to make adjustments. 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: December 2020 to February 2021 estimates show a quarterly decrease in the unemployment rate, while the economic inactivity rate increased, as it did during the first coronavirus restrictions, and the employment rate continued to fall

UK employment, unemployment and economic inactivity rates, seasonally adjusted, between December 2005 to February 2006 and December 2020 to February 2021

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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 December 2020 to February 2021:

  • the estimated employment rate for all people was 75.1%; this is 1.4 percentage points down on the same period the previous year and 0.1 percentage points down compared with the previous quarter (September to November 2020)

  • the estimated employment rate for men was 78.2%; this is 2.3 percentage points down on the same period the previous year and 0.3 percentage points down on the quarter

  • the estimated employment rate for women was 72.1%; this is 0.6 percentage points down on the same period the previous year but 0.1 percentage points up on the quarter

The single-month and weekly estimates of the employment rate over the three-month period suggest that the rate was lowest in December and increased slightly in January and February.

Estimates for December 2020 to February 2021 show 32.43 million people aged 16 years and over in employment, 643,000 fewer than a year earlier and down 73,000 on the quarter. 

The LFS collects information on those temporarily away from paid work that they expect to return to. These experimental weekly Labour Force Survey (LFS) estimates show that before the first lockdown the estimated proportion of people temporarily away from work (that is, the total number of people temporarily away from work divided by the total number of people in employment) was approximately 7.5%. These people could be away for a variety of reasons including sickness, maternity or paternity leave, holidays or economic reasons. There was a large increase in both March and April 2020 in those stating that they were temporarily away from paid work, with nearly 28% away from work in the final week of April 2020. While the proportion of people temporarily away from work has fallen since its peak in April, it has still not dropped below 10%, and increased in November and December 2020 as a result of further national lockdowns. It remained elevated and averaged around 15% in the first two months of 2021.

Experimental weekly LFS estimates show approximately 500,000 employees received no pay while their job was on hold and/or affected by the coronavirus pandemic in April and May 2020. This decreased and had remained largely flat at around 200,000 since July 2020; however, it has increased over the last quarter to an average of just over 300,000 in January and February 2021.

The Business Insights and Conditions Survey (BICS) Wave 27 (8 to 21 March 2021) showed that 19% of the business workforce was on furlough. The arts, entertainment and recreation industry (58%) and the accommodation and food service activities industry (51%) sustained high proportions of furloughed workers. Both industries experienced the largest increase in furlough rates between early December 2020 and mid-March 2021.

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 December 2020 to February 2021:

  • the estimated UK unemployment rate for all people was 4.9%; this is 0.9 percentage points higher than a year earlier but 0.1 percentage points lower than the previous quarter

  • the estimated UK unemployment rate for men was 5.2%; this is 1.0 percentage point higher than a year earlier but 0.2 percentage points lower than the previous quarter

  • the estimated UK unemployment rate for women was 4.6%; this is 1.0 percentage point higher than a year earlier but largely unchanged compared with the previous quarter

The single-month and weekly estimates of the unemployment rate suggest that the rate decreased slightly between December 2020 and February 2021.

For December 2020 to February 2021, an estimated 1.67 million people were unemployed, up 311,000 on the same period the previous year but down 50,000 on the quarter, the first quarterly decrease since October to December 2019.

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 December 2020 to February 2021:

  • the estimated economic inactivity rate for all people was 20.9%; this is up by 0.7 percentage points on the same period the previous year (the largest annual increase since February to April 2010) and up by 0.2 percentage points on the quarter

  • the estimated economic inactivity rate for men was at a joint record high of 17.5% (the highest it has been since May to July 2011); this is up by a joint record 1.6 percentage points on the same period the previous year and up by 0.5 percentage points on the quarter

  • the estimated economic inactivity rate for women was at a record low of 24.3%; this is down by 0.2 percentage points on the same period the previous year and down by 0.1 percentage points on the quarter

Estimates for December 2020 to February 2021 show 8.67 million people aged between 16 and 64 years not in the labour force (economically inactive). This was 303,000 more than a year earlier, which was the largest annual increase since February to April 2010. Economic inactivity had been relatively flat for the last two quarters but has increased by 80,000 compared with September to November 2020, coinciding with the introduction of further national lockdown measures. This is similar to the large increases in economic inactivity we saw at the time of the first lockdown.

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5. Hours worked

Total actual weekly hours worked in the UK was 959.9 million hours in December 2020 to February 2021 (Figure 3). This was a decrease of 20.1 million, or 2.1%, from the previous quarter, coinciding with the introduction of further coronavirus (COVID-19) lockdown measures, which has stalled the recent recovery in total hours.

Average actual weekly hours worked saw a decrease of 0.6 hours on the quarter to 29.6 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 October 2020 to the end of February 2021.

Reports of redundancy in the three months prior to interview increased by 3.5 per thousand on the year in December 2020 to February 2021, but decreased by a record 6.8 per thousand on the quarter, to 7.3 per thousand, substantially lower than the record high of 14.2 per thousand in September to November 2020 (Figure 4).

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7. Vacancies

There were an estimated 607,000 vacancies in January 2021 to March 2021. This is 178,000 (22.7%) fewer than the estimated 785,000 vacancies a year earlier, immediately prior to the start of coronavirus (COVID-19) social distancing measures. The increase in vacancies over the latest quarter was 17,000, which is a six-month consecutive slowdown in the quarterly figures from the 165,000 increase seen in September 2020.

The headline vacancy estimates are based on three-month averages, which naturally involve some time lag. Insight into trends in March 2021 alone is provided by two experimental sources. Firstly, single-month vacancy estimates, available in Dataset x06, indicate that there were nearly 16% more vacancies in March 2021 compared with February 2021.

The online job advert estimates estimates also provide an early insight into a possible strengthening of vacancies in March and into the first two weeks of April 2021.

According to the KPMG and REC, UK Report on Jobs published in April 2021, the number of permanent and temporary vacancies grew rapidly in March 2021 compared with February 2021. Demand for permanent workers rose at the quickest rate in six years, reflecting the anticipated easing of lockdown restrictions. However, labour supply remained unchanged for the second month in a row, as the increase in labour supply from the rise in redundancies was offset by a rise in individuals who were reluctant to seek new roles amid fears over job security.

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8. Earnings growth

The rate of annual pay growth was positive 4.5% for total pay and positive 4.4% for regular pay in December 2020 to February 2021 (Figure 6). Average pay growth rates have been affected upwards by a fall in the number and proportion of lower-paid jobs compared with before the coronavirus (COVID-19) pandemic. Therefore, it is estimated the net impact of recent job losses is to increase the estimate of average pay by approximately 1.9% – suggesting an underlying wage growth of around 2.5% for total and regular pay. 

The change in pay growth has been affected by a changing composition of employee jobs, where we have seen a fall in the number and proportion of lower-paid employee jobs. Changes in the profile of employee jobs in the economy will affect average pay growth; a decrease in employee numbers in jobs that have lower pay can have an upward effect on average pay, and the other way around. Further information on the compositional effect can be found in Average Weekly Earnings in Great Britain: April 2021.

The KPMG and REC, UK Report on Jobs published in April 2021 indicates that an increase in demand for labour led to improvements in pay trends for March 2021. Starting salaries rose for the first time in 2021, as temporary wages increased for the first time in three months.

The Office for Budget Responsibility's economic and fiscal outlook published in March 2021 reported that earnings growth is likely to increase in 2021 and in 2022. The growth will be helped by the extension of the government job retention schemes, an increase in productivity and a decline in labour market slack.

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9. 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 7 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.

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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10. Labour market data

Summary of labour market statistics
Dataset A01 | Released 20 April 2021
Estimates of employment, unemployment and other employment-related statistics for the UK.

Real Time Information statistics
Dataset Real Time Information statistics | Released 20 April 2021
Earnings and employment statistics from Pay As You Earn (PAYE) Real Time Information (RTI) (Experimental Statistics) seasonally adjusted.

Labour Force Survey weekly estimates
Dataset X07 | Released 20 April 2021
Labour Force Survey (LFS) experimental weekly estimates of employment, unemployment, economic inactivity and hours in the UK.

Labour Force Survey single month estimates
Dataset X01 | Released 20 April 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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11. 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).

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.

A more detailed glossary is available.

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12. 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 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 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 later 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.

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 Dataset A11: Labour Force Survey sampling variability, which is part of the Labour market overview, UK release.
  3. 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 intend to make adjustments where 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.

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

Notes

  1. The sampling variability estimates are for 95% confidence intervals (where we are 95% certain the true value lies within the specified range) and are calculated on not seasonally adjusted data for single month growth rates for the 12 months from January to December 2014. It is not possible to calculate confidence intervals for growth rates in real terms.
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13. 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.

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