Labour Market statistics: January 2021

01 February 2021

The Institute for Employment Studies (IES) has released its latest Labour Market Statistics report, which suggests that the labour market stopped deteriorating towards the end of 2020, and that the worst point was reached during the first stage of the coronavirus crisis.

The analysis looks at Labour Force Survey data covering the period from September to November 2020, along with Pay As You Earn (PAYE) Real Time Information (RTI) data, information from the Office for National Statistics (ONS) Vacancy Survey and additional administrative data from the benefits system on Universal Credit and Jobseeker’s Allowance. It establishes that, whilst it appears that the labour market is no longer reversing, it could be fair to state that it is stuck in neutral, and that there is not much to signify any sustained recovery.

Over recent months, it appears that things became more stable, as employment levelled off towards the latter part of the year, and unemployment growth was driven by an increase in the size of the labour force. There have been substantial increases in the number of redundancies, because of the impacts of the first lockdown, and it is predicted that they have now peaked, and will begin to decrease from next month.

In terms of the impacts on different groups, it is apparent that young people are still affected significantly but are starting to regain some of the ground lost in more recent months, and older workers are the group that now appear to be losing out more. Employment has decreased more for men than for women. These impacts are probably due to occupational and sectoral factors – the examples provided include young people benefitting from restrictions being eased in the Autumn and similarly, women from increased public sector employment.  There is an indication that job insecurity is on the rise, due to noticeable increases to involuntary temporary and part-time work.

There was no marked weakening in the labour market due to the second lockdown, in November 2020, but it inevitably had an impact on the recovery, as it appears that vacancies and hiring were hindered, as lockdown restrictions were made more stringent.

The latest figures indicate that there could be a prolonged period of weakness in the labour market, but, if the virus can be contained and the vaccination roll-out is effective, there is nothing to prevent a bounce-back towards the end of 2021. The IES asserts that a priority of the Budget, due to be held on 3 March 2021, must be to support new hiring, jobs growth and measures aimed to assist those who are the most disadvantaged in the labour market.


The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.