UK labour demand continues to weaken
26 January 2021The UK labour market continues to weaken, according to ONS data. This is likely to be a consequence of Coronavirus, combined with overall low demand and EU Exit...
The UK labour market continues to weaken, according to ONS data. This is likely to be a consequence of Coronavirus, combined with overall low demand and EU Exit effects.
Perhaps most concerning is that the rate of redundancy continues to rise – 395,000 workers were made redundant in October 2020, the most recent month for which data is available. This is approximately four times the typical pre-Coronavirus rate.
Job loss is noted across the whole economy, but primarily in the private sector, rather than the public sector. The bulk of redundancies in the latest 12 weeks have come from the motor trade (17%), manufacturing (15%), business services (10%) and foodservice/accommodation (9%). Men appear to be slightly more at risk of redundancy than women.
The number of employees in the UK has fallen slightly, but many workers may be under utilised – around 11% of the workforce was on “furlough” in early December. Note that those on furlough still count as being employed in ONS methodology.
If government financial support for furlough were to be withdrawn or made less generous, then it is likely that employment would fall, and unemployment would rise sharply.
Unemployment has edged up to 5.0% in the latest month (higher for young adults). It is not clear what exactly is happening to those becoming redundant as numbers for unemployment and economic inactivity do not seem to be edging up as might be expected.
It is possible that at least some people made redundant are overseas workers who have now left the UK labour market entirely. However, in other ONS research, employers do not report difficulty in retaining overseas workers.
The number of unfilled job vacancies has risen slightly from the low point reached in May 2020 but remains below the pre-crisis level. Hours worked in the UK economy remain depressed.
Source: ONS, January 2021