In this week's labour market update from Charlie Ball, brought to you by Prospects at Jisc: how socio-economic group and ethnicity affect the returns brought by undergraduate study, lots of new data from the ONS and two reports from the CBI
The Office for National Statistics (ONS) released their monthly labour market overview on 23 March:
- 693,000 fewer people were in payrolled employment in February 2021, when compared with February 2020.
- 437,000 (63.1%) were under 25 years, 174,000 (25.2%) were aged 25 to 34 years and 109,000 (15.7%) were aged 35 to 49 years. Only 5,000 (0.7%) were aged 65 years and over. This decrease is net of an increase of 32,000 aged 50 to 64 years.
- Of the 693,000 decrease in payrolled employees since February 2020, 368,000 can be attributed to employees working in the accommodation and food service activities sector, 123,000 in the wholesale and retail trade sector, while only 1,000 can be attributed to employees working in the construction sector. This decrease is net of an increase of 43,000 employees working in public administration, and 132,000 employees in health and social work.
- 68,000 more people were in payrolled employment in February 2021, when compared with January 2021; this is the third consecutive monthly increase.
- The UK employment rate, in the three months to January 2021, was estimated at 75.0%, 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.
- The UK unemployment rate, in the three months to January 2021, was estimated at 5.0%, 1.1 percentage points higher than a year earlier and 0.1 percentage points higher than the previous quarter.
- The UK economic inactivity rate was estimated at 21.0%, 0.6 percentage points higher than a year earlier and 0.3 percentage points higher than the previous quarter.
- The redundancy rate, in the three months to January 2021, was estimated at 11.0 people per thousand employees.
- There were an estimated 601,000 vacancies in the UK in December 2020 to February 2021; this is 220,000 fewer than a year ago and the rate of increase in vacancies has slowed strongly in recent months.
- Growth in average total pay (including bonuses) among employees for the three months November 2020 to January 2021 increased to 4.8%, and growth in regular pay (excluding bonuses) increased to 4.2%; it is estimated that by removing the compositional effect, the underlying wage growth is around 3% for total pay and around 2.5% for regular pay.
A regional breakdown is also available:
- Of the 693,000 decrease in payrolled employees since February 2020, 209,000 can be attributed to employees living in London, 105,000 in the South East, while only 7,000 can be attributed to employees living in Northern Ireland.
- Compared with February 2020, pay grew fastest for Scotland (positive 5.4%) and slowest in the North East (positive 3.4%).
- For the three months ending January 2021, the highest employment rate estimate in the UK was in the South East (78.5%) and the lowest was in Northern Ireland (69.3%). Most regions saw a decrease in the employment rate compared with the same period last year, except for Yorkshire and The Humber, which saw a small increase of 0.7 percentage points.
- For the three months ending January 2021, the highest unemployment rate estimate in the UK was in London (7.2%) and the lowest was in the South East (3.4%). Most regions saw an increase in the unemployment rate compared with the same period last year, with London seeing the largest increase, at 2.7 percentage points. The North East remained unchanged compared with the same period last year.
- For the three months ending January 2021, the highest economic inactivity rate estimate in the UK was in Northern Ireland (28.0%) and the lowest was in the South East (18.8%). Most regions saw an increase in the economic inactivity rate compared with the same period last year, except for Yorkshire and The Humber which saw a decrease of 1.3 percentage points, and London with a decrease of 0.8 percentage points.
- Between September and December 2020, workforce jobs decreased in most regions of the UK, with the largest decrease of 60,000 seen in London. The largest increase was in the West Midlands, with an increase of 26,000. London has the highest proportion of service-based jobs, at 92.2%, while for the production sector, the highest proportion of jobs is in the East Midlands, at 12.7%.
- Average weekly hours worked, for the 12 months ending September 2020, varied between London, with 30.9 million hours worked and the North East, with 27.9 million hours worked. All regions saw a decrease in the average weekly hours worked, compared with the same period last year, with the North West and Scotland both with the largest decreases of 3.2 hours per week. For total weekly hours worked, the South East saw the largest decrease compared with the same period last year, down 13.2 million hours per week.
Average returns to undergraduate degrees at age 30 are positive for people from all socioeconomic and ethnic groups studied, but there is a lot of variation between groups.
Scottish data is available too:
- Scotland's unemployment rate (for ages 16+) decreased slightly over the quarter (0.1 percentage points) and increased over the year (0.6 percentage points) to 4.1%. Scotland's unemployment rate was below the UK rate of 5.0 per cent.
- The proportion of people aged 16 to 64 in work (the employment rate) decreased over the quarter (0.6 percentage points) and decreased over the year (0.7 percentage points) to 74.3%. Scotland's employment rate was below the UK rate of 75.0 per cent.
The Welsh update is, as usual, provided courtesy of the Senedd’s research group:
- For November 2020 to January 2021 the unemployment rate for people aged 16+ in Wales was 4.5%, compared to 4.6% in the previous quarter (August 2020 to October 2020). This is a decrease of 2,000 people from the previous quarter to 68,000.
- The unemployment rate in Wales (4.5%) is lower than England (5.0%) but higher than Scotland (4.1%) and Northern Ireland (3.7%).
- For the 12 months to September 2020 Swansea West had the highest rate (7.8%) and Carmarthen West and South Pembrokeshire the lowest rate (0.9%) of Welsh parliamentary constituencies.
Last but certainly not least, Northern Irish data is here:
- The number of people on the NI claimant count increased over the month to 58,900 in February 2021. This is the first monthly increase since the peak in May 2020.
- The NI unemployment rate decreased over the quarter (0.1 percentage points) and increased over the year (1.3 percentage points) to 3.7% in November to January 2021. The NI unemployment rate was below the UK rate (5.0%)
- Businesses reported that employee jobs decreased over both the quarter and the year to 770,900 jobs in December 2020. This marked the third consecutive quarter of decline in employee jobs. The quarterly decline in December 2020 was driven by decreases within the services, construction and other industry sectors. The annual decrease was the second consecutive annual decline since September 2012, and was driven by decreases in the services (-9,870 jobs) and manufacturing (-830 jobs) sectors.
As always, the House of Commons Library has updated their guide to the effects of COVID on the labour market and this remains an essential read. Also recently updated and worth reading from the Library - the impact of COVID on young people and on women.
The latest round of the ONS fast response experimental statistics on the impact of COVID were released on the 25 March:
- 32% of the workforce worked solely from home last week.
- 19% of the workforce were on partial or full furlough leave - around 6.1 million workers.
- Total online job adverts on 19 March 2021 were at 94% of their average level in February 2020.
- Vacancies in manufacturing, construction, transport/logistics, IT, science and health/social care are above the Feb 2020 levels.
- On 19 March 2021, online job adverts on Adzuna exceeded their February 2020 average level in Northern Ireland, the North East, the East Midlands and the West Midlands.
The ONS have also published their fortnightly review of the impact of the coronavirus pandemic and other events on UK businesses and the economy:
- The percentage of currently trading businesses experiencing a decrease in turnover, compared with normal expectations for this time of year, has fallen from 46% in January 2021 to 42% in early March 2021, the same level as seen in late December.
- The percentage of businesses in the accommodation and food service activities industry with three months' cash reserves or less has fallen below 50% for the first time since early December 2020, as the percentage responding 'not sure' increased.
- The arts, entertainment and recreation industry and the accommodation and food service activities industry had more than half of their workforce on furlough leave and have seen the largest percentage point increases in the proportion of their workforce on furlough leave since early December.
- The main challenge reported by currently trading businesses for exporting and importing remained additional paperwork.
- A third of businesses in the manufacturing industry experienced an increase of prices of materials, goods or services bought, in early March.
The Institute of Fiscal Studies have used Longitudinal Education Outcomes (LEO) data to examine returns to undergraduate degrees by socio-economic group and ethnicity.
- Average returns to undergraduate degrees at age 30 are positive for people from all socioeconomic and ethnic groups studied, but there is a lot of variation between groups.
- Returns are especially high for privately-educated graduates, whose median earnings at age 30 are the highest of all groups.
- However, the IFS find that the groups with the lowest graduate earnings, such as Pakistani students or state-educated students from the poorest families, also have relatively high returns from going to university. The reason is that the earnings prospects of these groups are very low on average if they do not attend university. Indeed, Pakistani graduates have the highest returns of all ethnic groups, even though they have the lowest median age-30 earnings at £23,000 for men and £19,000 for women.
- Some but not all of the differences in returns can be explained by variation in subjects chosen and institutions attended. Subject choice explains little of the variation in returns by socio-economic status, but a substantial amount of the variation in returns by ethnicity: Asian students systematically choose more lucrative subjects than White British students. Conversely, institution choices can partly explain why private school students get higher returns from university than those who attended state schools, yet institution choices do not explain much of the variation in returns by ethnicity.
- Unexplained differences in earnings between groups are mostly smaller among graduates than among non-graduates. This implies that differences in the returns to higher education 'even out' some of the earnings differences between non-graduates that cannot be explained by other factors. However, large unexplained earnings gaps between socio-economic and ethnic groups remain. In particular, controlling for background conditions, prior attainment, and university and subject choice, graduate men from all non-White ethnic groups earn significantly less than White British graduates.
The Resolution Foundation have issued their quarterly Earnings Outlook for the UK:
- Earnings growth fell in the early months of the pandemic, and briefly became negative, driven in part by many furloughed workers receiving only 80 per cent of their usual pay. But more recently, both nominal and real earnings have begun to grow at rates not seen since the early 2000s.
- At least part of this is down to compositional effects - as lower-paid workers have been more likely to lose their jobs, the average person still in work is higher-paid.
- The median worker in the professional services sector experienced a pay freeze, despite the fact that workers in this industry have been more likely than average to be able to work from home. Many of those in sectors that have been relatively sheltered from pandemic-related job losses and furloughing are nonetheless facing an economic hit.
Sectors less affected by the crisis could experience strong growth over the years ahead such as construction, IT and professional services.
The Recruitment & Employment Confederation (REC) have released their monthly Jobs Recovery Tracker in conjunction with EMSI:
- There were 146,000 new job adverts posted in the third week of March 2021, following 179,000 in the previous week. These were the two highest weekly figures since the pandemic hit the UK.
- In contrast, the number of active job postings in the UK fell to 1.29 million in mid-March, a drop of 1.8% week-on-week, as more adverts expired and were removed from job sites.
- Temporary roles represented around 16.3% of all active job adverts in mid-March 2021, compared to 15.1% in early July 2020 as the first lockdown was eased, and 14.0% in mid-March 2020.
- In the third week of March the occupation with the highest increase in active job postings was veterinary nurses (+14.3%) and there were also increased demand for bricklayers (+13.6%) and therapy professionals (+9.4%). There was also another rise in vacancies for ophthalmic opticians.
There are two reports from the CBI this week. The first is the CBI Growth Indicator:
- Private sector activity fell at the slowest pace in a year in the three months to March.
- Business and professional services (-5% from -21%), consumer services (-38% from -76%) and distribution firms (-23% from -26%) all reported a slower pace of decline in activity. And manufacturers reported broadly flat output (+3% from -8%); the most positive balance for the sector since May 2019.
- Looking ahead, expectations for growth over the next three months are the strongest since February 2018 (+24%), driven by predictions of above average growth in each main sector. For business and professional services (+32%) and manufacturers (+30%), these are the highest expectation for growth since June 2015 and August 2017 respectively.
- While consumer services (+10%) and distribution firms (+11%) expect a slower pace of growth by comparison, these nonetheless are the strongest expectations for these sectors since January 2020 and February 2020 respectively.
The other report from the CBI is its Industrial Trends Survey:
- Output increased in eight out of 17 sub-sectors. Growth in the electronic engineering and plastic products sub-sectors was largely offset by declines in paper, printing and media, and aerospace in the headline balance.
- Manufacturers expect output to pick up rapidly over the next three months, with expectations at their strongest since August 2017.
- Manufacturers anticipate output price growth will accelerate quickly in the next quarter, the strongest expectations since February 2019. Additionally, firms reported inventories as being broadly adequate, which, nonetheless, was their weakest balance since December 2017.
The Work Foundation and Cambridge Econometrics have summed up the last 12 months in the labour market and look to the future:
- The national economic performance during the pandemic has been a cause for significant concern, but hides the uneven spatial impacts of COVID-19, which will have serious long-term consequences for some local economies.
- GVA (economic output) in the UK fell by 9.4% (£164billion) in real terms during 2020. This was double the contraction resulting from the 2008/09 financial crisis.
- In contrast with the sharp fall in GVA, employment has been relatively resilient. The decline in jobs during this crisis has to date reached only one-fifth of that experienced during the early 1990s recession (386,000 vs 1.9 million).
- Downsizing in manufacturing and production that was already in train has been accelerated as a result of the crisis, and by effects from Brexit.
- Other sectors that have been particularly affected by lockdowns including retail, leisure and tourism are expected to experience a rapid recovery once restrictions ease and consumer demand picks up over a sustained period.
- Sectors less affected by the crisis could experience strong growth over the years ahead such as construction, IT and professional services.
- There is a real risk that the economic recovery will see the restoration of many insecure, low paid jobs.
Indeed continue their analysis of their vacancies data.
- The mix of jobs is very different from a year ago. The pandemic has had vastly contrasting impacts on different sectors of the economy. Worst-affected sectors have seen job postings fall to fractions of their former levels.
- Workers in shuttered sectors have been looking elsewhere, mainly toward sectors with low entry barriers.
- Sectors requiring high qualifications, like software development, healthcare and engineering, still receive relatively few clicks per posting and roles remain relatively difficult to fill.
- The lack of job opportunities in sectors like hospitality and retail has been particularly harmful to younger workers with less education.
- Jobseekers are anticipating opportunities in reopening sectors in their search activity. A variety of hospitality and food service roles are among the fastest-growing search terms on Indeed, along with terms relating to beauty, therapy, gyms, cafes and high street retail.
Jisc have released our new HE strategy for the next three years. Jisc will:
- On labour market issues, improve the student experience by capturing and analysing the many kinds of data that can be collected across a university that in turn enables student services to support student wellbeing and improve the quality of interventions.
- Enhance students' progression into employment through informed and tailored career insight and choices and explore the employability skills required for the fourth industrial revolution.
- Be recognised as the authority on regional and national labour market information, data and research to help universities support students and partnerships with employers.
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