Labour market overview, UK: November 2020

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

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10 November 2020

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

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Contact:
Email Debra Leaker

Release date:
10 November 2020

Next release:
15 December 2020

2. Main points

Early estimates for October 2020 suggest that there is a slight drop over the month in the number of payroll employees in the UK. Since March 2020, the number of payroll employees has fallen by 782,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic.

Data from our Labour Force Survey (LFS) shows the employment rate has been decreasing since the start of the coronavirus pandemic, while the unemployment rate is now rising sharply. Redundancies have reached a record high in the most recent period, and total hours worked, while still low, show signs of recovery. The number of people temporarily away from work has fallen since its peak in April and May 2020. There are also fewer people away from work because of the pandemic and receiving no pay.

Vacancies have continued to recover in the latest period but are still below the levels seen before the impact of the coronavirus pandemic. Annual growth in employee pay continued to strengthen as more employees returned to work from furlough, but pay growth is still subdued as some workers remain furloughed and employers were paying less in bonuses.

  • The UK employment rate in the three months to September 2020 was estimated at 75.3%, 0.8 percentage points lower than a year earlier and 0.6 percentage points lower than the previous quarter.

  • The UK unemployment rate in the three months to September 2020 was estimated at 4.8%, 0.9 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter.

  • In the three months to September 2020, redundancies reached a record high of 314,000; an increase of a record 181,000 on the quarter.

  • In October 2020, 33,000 fewer people were in payrolled employment when compared with September 2020 and 782,000 fewer people were in payrolled employment when compared with March 2020.

  • The Claimant Count dropped slightly in October 2020, to 2.6 million; this includes both those working with low income or hours and those who are not working.

  • There were an estimated 525,000 vacancies in the UK in August to October 2020; this is 278,000 fewer than a year ago and 146,000 more than the previous quarter.

  • Growth in average total pay (including bonuses) among employees for the three months July to September 2020 increased to 1.3%, and growth in regular pay (excluding bonuses) also increased, to 1.9%.

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The majority of data in this bulletin come from surveys of households and businesses. It is not possible to survey every household and business each month, so these statistics are estimates based on samples.

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3. Employment, unemployment and economic inactivity

Figure 1: The unemployment rate is rising sharply and the employment rate is falling

UK employment, unemployment and economic inactivity rates, seasonally adjusted, between July to September 2005 and July to September 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 (to which they are expecting to return). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

Estimates for July to September 2020 show 32.51 million people aged 16 years and over in employment, 247,000 fewer than a year earlier and 164,000 fewer than the previous quarter.

For July to September 2020:

  • the estimated employment rate for all people was 75.3%; this is 0.8 percentage points down on the year and 0.6 percentage points down on the quarter

  • the estimated employment rate for men was 78.6%; this is 1.7 percentage points down on the year and 1.1 percentage points down on the quarter

  • the estimated employment rate for women was 71.9%; this is 0.1 percentage points up on the year and 0.1 percentage points down on the quarter

The single-month and weekly estimates of the employment rate suggest that the rate has been falling throughout 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 was 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 but has fallen to around 3.9 million people in September 2020. There were also around 210,000 people away from work because of the pandemic and receiving no pay in September 2020; this has fallen from around 658,000 in April 2020.

BICS (Business Impact of COVID-19 survey) data show that the number of people on furlough decreased between July and September. In the two weeks to 20 September 2020, 9% of the workforce were on partial or full furlough leave. Arts, entertainment and recreation, and accommodation and food services had the greatest proportion of workers on furlough, at 32% and 27% respectively. Analysis from the Resolution Foundation also shows that 9% of those previously furloughed were no longer working in September.

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.

Estimates for July to September 2020 show an estimated 1.62 million people were unemployed, 318,000 more than a year earlier and 243,000 more than the previous quarter.

For July to September 2020:

- the estimated UK unemployment rate for all people was 4.8%; this is 0.9 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter

- the estimated UK unemployment rate for men was 5.2%; this is 1.1 percentage points higher than a year earlier and 1.0 percentage points higher than the previous quarter

- the estimated UK unemployment rate for women was 4.3%; this is 0.7 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter

The single-month and weekly estimates of the unemployment rate suggest that the rate has been increasing throughout the three-month 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.

Estimates for July to September 2020 show 8.66 million people aged between 16 and 64 years not in the labour force (economically inactive), 46,000 more than a year earlier and 21,000 more than the previous quarter.

For July to September 2020:

- the estimated economic inactivity rate for all people was 20.9%; this is up by 0.1 percentage points on the year and unchanged on the quarter

- the estimated economic inactivity rate for men was 17.0%; this is up by 0.8 percentage points on the year and up by 0.3 percentage points on the quarter

- the estimated economic inactivity rate for women was 24.8%; this is down by 0.7 percentage points on the year and down 0.2 percentage points on the quarter

Looking at estimates of flows between employment, unemployment and economic inactivity between April to June 2020 and July to September 2020, there was a net flow of:

  • 133,000 from employment to economic inactivity

  • 1,000 from unemployment to employment

  • 215,000 from economic inactivity to unemployment; the largest net flow from inactivity to unemployment on record

The net flow into unemployment was 214,000; the largest net flow into unemployment on record. This was driven by those moving from economic inactivity to unemployment, which contrasts with the small net flow from unemployment to economic inactivity seen in April to June 2020.

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4. Hours worked

Between April to June 2020 and July to September 2020, total actual weekly hours worked in the UK saw a record increase of 83.1 million, or 9.9%, to 925.0 million hours.

Average actual weekly hours worked saw a record increase of 2.7 hours on the quarter to 28.5 hours.

The IHS Markit states that the recovery in business activity, which continued across the manufacturing and service sectors in September 2020, reflects the record increase in total hours worked on the quarter to September. However, and similarly to hours worked, the level of activity in the economy is significantly lower when compared with the previous year, and the IHS Markit reports an ease in the rate of expansion from the 72-month high recorded in August 2020.

The weekly Opinions and Lifestyle survey (OPN) displayed an easing in the proportion of employees experiencing reduced hours in the four days to 9 August 2020, when compared with the 10 days to 13 April 2020, but a reduction that remained prevalent, nonetheless.

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5. 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 relate to redundancies over the period from the beginning of April to the end of September 2020.

Redundancies increased in July to September 2020 by 195,000 on the year, and a record 181,000 on the quarter, to a record high of 314,000 (Figure 3). The annual increase was the largest since February to April 2009. Experimental weekly Labour Force Survey (LFS) estimates show that redundancies have been increasing since June 2020, with strong growth during the first two weeks of September 2020.

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6. 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 October 2020 indicate that there were 28.2 million payrolled employees, a fall of 2.6% compared with the same period of the previous year and a decline of 763,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees decreased by 0.1% in October 2020 – equivalent to 33,000 people.

Early estimates for October 2020 indicate that median monthly pay increased to £1,916, an increase of 4.6% compared with the same period of the previous year.

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7. Claimant Count (Experimental Statistics)

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These Claimant Count statistics relate to 8 October 2020. Enhancements to Universal Credit 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.

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

The Claimant Count dropped slightly in October 2020 to 2.6 million (Figure 5). This represents a monthly decrease of 1.1% and an increase of 112.4%, or 1.4 million, since March 2020.

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8. Vacancies

For August to October 2020, there were an estimated 525,000 vacancies, which is a quarterly increase of 146,000 vacancies and an increase of 182,000 vacancies from the record low in April to June 2020. The smallest businesses, with one to nine employees, saw the largest quarterly growth in vacancies, with an estimated increase of 36,000 (51.8%) vacancies, compared with an estimated increase of 18,000 (12.4%) for larger businesses with more than 2,500 employees. Despite the increase, vacancies remain below the pre-coronavirus (COVID-19) pandemic levels and are 278,000 (34.6%) less than a year ago.

While the experimental single-month estimates should not be considered accurate estimates of vacancies in the reported months, they do indicate an increase of approximately 70% in the estimated vacancies for October 2020 compared with April 2020. However, estimated vacancies for October 2020 are still around 20% less than in March 2020 and 30% less than a year ago.

The Bank of England, in their August Monetary Policy Report (MPR) indicated that the differential impact of the pandemic and coronavirus restrictions in various sectors of the economy is likely to cause a temporary mismatch of skills and vacancies in the labour market; this can lead the unemployment rate to decrease more slowly, as well as vacancies proving more difficult to fill. This is expected to last well into 2021, depending on the persistence of the differential impact of the coronavirus across sectors, and the ability of the workforce to build new skills.

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9. Earnings growth

In July to September 2020, the rate of annual pay growth was positive 1.3% for total pay and positive 1.9% for regular pay. The difference between the two measures is because of subdued bonuses, which fell by an average of negative 10.7% in the three months to September 2020.

The rate of total and regular pay growth had stood at 2.9% 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 1.2% for total pay and negative 0.1% for regular pay before some increases in July, August and September.

In real terms, total pay in July to September grew at a faster rate than inflation, at positive 0.5%, and regular pay growth in real terms was also positive, at 1.2%.

Between July to September 2019 and July to September 2020, average pay growth varied by industry sector. The public sector saw the highest estimated growth in total pay, at 3.7%. Negative growth was seen in the construction sector, estimated at negative 3.9%, the wholesaling, retailing, hotels and restaurants sector, estimated at negative 0.5%, and manufacturing at negative 0.2%. This is, however, an improvement on the growth rates during April to June 2020, especially in construction and accommodation and food services (which sits in the wholesaling, retailing, hotels and restaurants grouping) which had seen falls of more than 10%.

The Bank of England November Monetary Policy Report (MPR) states that pay of non-furloughed workers flattened throughout the pandemic, and median pay settlements decreased to zero in the three months to September 2020. Weak pay growth indicates labour market slack, which might reflect tight cash constraints that some firms encounter. The same report sets out an expectation for subdued pay growth in the upcoming months, because of fears of rising unemployment and reduced volumes of job-to-job moves, which are a determinant of upward pressure on pay.

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10. Coronavirus and measuring the labour market

The data presented in this bulletin are collected from various sources. Each covers different reference periods or count dates and is therefore impacted 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 impacted 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 Labour Force Survey 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.

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11. Labour market data

Summary of labour market statistics
Dataset A01 | Released 10 November 2020
Estimates of employment, unemployment and other employment-related statistics for the UK.

Employment, unemployment and economic inactivity
Dataset A02 SA | Released 10 November 2020
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 10 November 2020
Estimates of Great Britain earnings growth based on the Monthly Wages and Salaries Survey.

Vacancies by industry
Dataset VACS02 | Released 10 November 2020
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 10 November 2020
Earnings and employment statistics from Pay As You Earn (PAYE) Real Time Information (RTI) (Experimental Statistics) seasonally adjusted.

Claimant Count
Dataset CLA01 | Released 10 November 2020
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 10 November 2020
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 10 November 2020
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 Claimant Count measures the number of people claiming unemployment-related benefits.

The Claimant Count estimates are currently designated as Experimental Statistics because the Universal Credit estimates are still being developed by the Department for Work and Pensions (DWP). However, the Claimant Count estimates provide the best available estimates of the number of people claiming unemployment-related benefits in the UK.

The Claimant Count does not meet the internationally agreed definition of unemployment specified by the International Labour Organization (ILO). The estimates are sourced from the Jobcentre Plus administrative system.

There is a large degree of overlap between the Claimant Count and unemployment, although the latter figures are generally much higher. People who are not claimants can appear among the unemployed if they are not entitled to unemployment-related benefits. For example:

  • people who are only looking for part-time work

  • young people aged under 18 years, who are not usually eligible to claim Jobseeker's allowance

  • students looking for vacation work

  • people who have left their job voluntarily

Some people recorded in the Claimant Count would not be counted as unemployed. For example, in certain circumstances people can claim Jobseeker's Allowance or Universal Credit while they have relatively low earnings from part-time work. These people would not be unemployed.

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

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.

A blog published in July 2020 by Jonathan Athow, Deputy National Statistician for Economic Statistics, explains some of the differences between sources. An article and blog were published in October 2020 explaining the impact of the Coronavirus on our Labour Force Survey.

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.

After EU withdrawal

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, 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.

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:

Future publication dates

15 December 2020

26 January 2021

23 February 2021

23 March 2021

20 April 2021

18 May 2021

Sampling variability

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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 A11shows 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