Today’s figures show that the labour market continued to weaken through July to September, weighed down by the ongoing fallout from the first lockdown. Employment fell and unemployment rose, with the latter reaching its highest since late 2016. Lower employment has been driven both by more people leaving work, and fewer people moving (back) into it – with job separations dominating during lockdown itself, but weak hiring playing more of a role in the recovery.
Redundancies reached a new peak in the three months to September, and we forecast that these will continue to rise in the next two months before falling back in the new year. While the growth in redundancies is alarming, today’s figures have not been anywhere near as bad as they could have been. The 315 thousand rise in redundancies this quarter, and even the 570 thousand fall in employment since the crisis began, have been dwarfed by the extraordinary figure that around five million workers who were ‘away’ from work during lockdown had so far returned to work by the end of September.
Hiring and vacancies are likely being held back in part by the significant spare capacity in firms as furlough unwound, and by continued economic uncertainty. However there were signs that vacancies had started to recover more strongly in September and October, driven in particular by smaller employers. While still not back to pre-crisis levels, and although likely to fall back again during November, this does nonetheless suggest that hiring could return relatively quickly if the conditions are right.
The significant falls in employment since the crisis began appear to be being driven by lower self-employment amongst men – particularly full-time work – and lower part-time employment amongst women (employee and self-employed). This has been offset by significant rises in full-time employment for women – which is now comfortably at its highest ever level and rate. Under-employment also appears to be creeping up, with more part-time workers wanting to increase their hours.
Once again, there are signs that young people are bearing the brunt of the crisis – with youth employment down by more than 300 thousand (54% of the total) and the youth employment rate falling to its lowest since 2014. This has however been more than offset by rising participation in education – although this should be treated with some caution, as in practice this is describing July to September, so a time when many of those ‘in education’ will have been waiting for courses to start.
Worryingly, today’s quarterly disability employment figures suggest that progress in narrowing the (very wide) employment gap for disabled people has stalled during this crisis and may be at risk of going into reverse. Disabled people are now more than two-and-a-half times more likely to be out of work than their non-disabled peers.
All told, the labour market had been in decent shape in the summer and early autumn, with most of the most negative impacts largely reflecting the continued fallout from the first lockdown in the spring. However, the second lockdown in November will bring with it a double dip, and likely further deterioration on the jobs market through the winter. This will be added to by uncertainty around Brexit. With the Spending Review just a few weeks away, the Chancellor needs to look at measures to get hiring going again and quickly – in particular by raising the National Insurance threshold so as to reduce labour taxes for firms, and by boosting departmental budgets so that public sector employment can pick up more of the slack from the private sector.