Tania Bowers, Legal Counsel and Head of Public Policy at APSCo

Latest ONS report states increased employment rate

Number of self-employed workers remains low  

The latest Labour Force Survey (LFS) has been released and contains estimates for November 2021 to January 2022. The survey has shown a continued recovery in the labour market. The employment rate has increased on the quarter with a decrease in the unemployment rate. However, economic inactivity has increased slightly on the quarter.  

The UK employment rate increased by 0.1 percentage points on the quarter to 75.6%. Full-time employees drove the increase in the employment rate during the latest three-month period. While the number of part-time employees decreased strongly during the pandemic, there’s been a steady increase in these figures since April to June 2021.  

 

Self-employed data raises concerns around the UK’s skills stability 

The number of self-employed workers remains low following decreases through the coronavirus pandemic. 

Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo), raised concerns around the UK’s level of self-employed professionals and made comment: “The continued increase in vacancies being reported by the ONS is a trend we expect to see continue for some time yet and has arguably become the ‘norm’ for the staffing sector over the last year. However, the fact that the data does also show that the number of self-employed workers remains low following decreases during the pandemic is a real concern given the tight labour market we’re experiencing. With highly skilled resources scarce, the UK’s economic recovery rests on the ability to tap into flexible resources. However, since the roll out of Off-Payroll, Brexit and following significant challenges during the pandemic, the self-employed have increasingly been driven to alternative employment routes.” 

The ONS stated that its most timely estimate of payrolled employees has shown another monthly increase (up 275,000) in February 2022 to a record 29.7 million. 

The unemployment rate decreased by 0.2 percentage points on the quarter to 3.9%, while it’s reported that economic inactivity rate increased by 0.1 percentage points to 21.3%.  

During the pandemic, increases in economic inactivity compared with the previous three-month period were largely driven by those aged 16 to 24 years. However, interestingly the LFS has shown that the number of economically inactive people aged 16 to 24 years has been decreasing since early 2021, with those aged 50 to 64 years driving the recent increases in economic inactivity.   

According to the survey, the number of job vacancies in December 2021 to February 2022 rose to a new record of 1,318,000. This is an increase of 105,000 from last quarter, with half of the industry sectors showing record highs. However, the rate of growth in vacancies has continued to slow down. 

Average total pay increase (including bonuses) was 4.8% and growth in regular pay (excluding bonuses) was 3.8% among employees in November 2021 to January 2022, according to the ONS. In real terms, with figures adjusted for inflation, growth in total pay was 0.1% and regular pay fell on the year at negative 1.0%; strong bonus payments over the past 6 months have kept recent real total pay growth positive. Previous months’ strong growth rates were affected upwards by base and compositional effects. These initial temporary factors have worked their way out. However, ONS is now comparing the latest period with a period where certain sectors had increasing numbers of employees on furlough because of the winter 2020 to 2021 lockdown, so a small amount of base effect will be present for these sectors. This will not be to the degree we saw when comparing periods at the start of the coronavirus pandemic. 

 

Challenging period ahead 

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation made comment: “Businesses across the country are doing what they can on pay, both for existing staff and to help them hire in a jobs market experiencing a severe labour shortage. But rising inflation both makes that effort hard, and reduces the gains workers feel from pay rises. In real terms, average pay has fallen compared to last year. Now is not the right time to be increasing taxes on work for both companies and workers. Ahead of the spring statement, we’re urging the Chancellor to delay the upcoming rise in National Insurance – the UK’s biggest business tax, as well as an additional income tax for workers. 

“A key way to reduce the pressure on our economy and keep inflation down will be to focus on ensuring employment rates and hours worked recover to pre-pandemic levels. Inactivity is still rising, so firms and government need to work together to address this. Recruiters have a key role to play here, from helping government with activation schemes to supporting employers with new forms of job offer to tempt people back into work.” 

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