Labour market overview, UK: June 2020

Other commentary from the latest labour market data can be found on the following pages:

• Employment in the UK

• Average weekly earnings in Great Britain

• Vacancies, jobs and public sector employment in the UK

• Earnings and employment from Pay As You Earn Real Time Information, UK

Early indicators for May 2020 suggest that the number of employees in the UK on payrolls is down over 600,000 compared with March 2020. The Claimant Count has continued to rise, enhancements to Universal Credit as part of the UK government's response to the coronavirus (COVID-19) mean an increase in the number of people eligible.

Meanwhile, the number of vacancies in May has fallen to a record low.

Labour Force Survey (LFS) data, covering the period up to end of April 2020, show weakening employment rates, with the self-employed and men seeing some reduction in employment. The largest changes are seen in the number of people temporarily away from work, including furloughed workers, which rose by 6 million at the end of March into April, leading to a large fall in hours worked.

Employee average pay growth slowed notably in April 2020, and the three months to April saw total pay fall in real terms for the first time since January 2018; pay declined in industries where furloughing was most prominent, many of these being the lowest-paying industries, in particular accommodation and food service activities.

• The UK employment rate in the three months to April 2020 was estimated at 76.4%, 0.3 percentage points higher than a year earlier but 0.1 percentage points down on the previous quarter.

• The UK unemployment rate for the three months to April 2020 was estimated at 3.9%, 0.1 percentage points higher than a year earlier but largely unchanged on the previous quarter.

• The total number of weekly hours worked in the three months to April 2020 was 959.9 million, down a record 94.2 million (8.9%) hours on the previous year.

• The three months to April 2020 saw total pay fall in real terms for the first time since January 2018.

• There were an estimated 476,000 vacancies in the UK in March to May 2020; this is 342,000 fewer than the previous quarter and 365,000 fewer than a year earlier; experimental single-month estimates indicate a decrease of approximately 60% of vacancies for May 2020 compared with March 2020.

• The Claimant Count continued to rise during May 2020 reaching 2.8 million; this includes both those employed with low income or hours and those who are unemployed.

• Early estimates for May 2020 from Pay As You Earn Real Time Information (PAYE RTI) indicate that the number of payroll employees fell by 2.1% (612,000) compared with March 2020.

The data presented in this bulletin are collected from various sources, each cover different reference periods or count dates and are therefore impacted differently by the coronavirus (COVID-19) social distancing and lockdown measures.

A blog published by David Freeman, Head of Labour Market Statistics, published on 15 June attempts to understand the impact on jobs and pay – how the Office for National Statistics (ONS) is now measuring the labour market.

Figure 1 shows the data reported in this bulletin (dark bars) alongside their different reference periods and count dates (white text). The main coronavirus (COVID-19) dates are included to show how much of the data presented were impacted by the implementation of coronavirus (COVID-19) social distancing and lockdown measures.

Figure 1: Impact of the main coronavirus (COVID-19) dates on labour market data sources

Data source reporting periods; reference periods and count dates alongside main coronavirus (COVID-19) dates

Employment measures the number of people aged 16 years and over in paid work and those who had a job that they were temporarily away from. The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

For February to April 2020:

• the estimated employment rate for all people was 76.4%; this is 0.3 percentage points up on the year but 0.1 percentage points down on the quarter

• the estimated employment rate for men was 80.1%; this is 0.2 percentage points down on the year and 0.4 percentage points down on the quarter

• the estimated employment rate for women was 72.7%; this is 0.7 percentage points up on the year and 0.2 percentage points up on the quarter

February to April 2020 saw a record quarterly fall in the number of self-employed (down 131,000) as seen in Figure 3.

Experimental estimates based on returns for individual weeks suggest no major change to the employment or unemployment rates are observed in any of the weeks since lockdown (week 13 in Quarter 1 (January to March) 2020 and weeks 1 to 4 in Quarter 2 (April to June)). However, a slight downward trend can be seen in the employment rate for the final two weeks of April 2020. The numbers who were employed, but temporarily away from work showed a significant increase at the end of March continuing into April (up around 6 million). Further details of the experimental weekly figures can be found in the Single month article.

Experimental data of the number of payroll employees using HM Revenue and Customs' (HMRC's) Pay As You Earn Real Time Information figures show a fall in payroll employees in recent months. Early estimates for May 2020 from PAYE RTI indicate that the number of payroll employees fell by 2.1% (612,000) compared with March 2020.

Between February to April 2019 and February to April 2020, total actual weekly hours worked in the UK decreased by 94.2 million, or 8.9%, to 959.9 million hours. A decrease of 91.2 million or 8.7% was also seen on the quarter. The “accommodation and food service activities” industrial sector saw the biggest fall in average actual hours; down 6.9 hours to 21.2 hours per week.

Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

Estimated unemployment rates for both men and women aged 16 years and over have generally been falling since late 2013 but have levelled off in recent periods (Figure 7).

For February to April 2020:

• the estimated UK unemployment rate for all people was 3.9%; 0.1 percentage points higher than a year earlier but unchanged on the previous quarter

• the estimated UK unemployment rate for men was 4.1%; this is 0.1 percentage points higher than a year earlier but unchanged on the previous quarter

• the estimated UK unemployment rate for women was 3.7%; this is largely unchanged compared with a year earlier and on the quarter

The Claimant Count is an Experimental Statistic that seeks to measure the number of people claiming benefit principally for the reason of being unemployed.

To achieve this, the Claimant Count has generally been a count of the appropriate benefits within the UK's current benefit regime that best meet that criteria. Currently this is a combination of claimants of Jobseeker's Allowance (JSA) and claimants of Universal Credit (UC) who fall within the UC "searching for work" conditionality.

Those claiming unemployment-related benefits (either UC or JSA) may be wholly unemployed and seeking work, or may be employed but with low income and/or low hours, that make them eligible for unemployment-related benefit support.

Under UC a broader span of claimants became eligible for unemployment-related benefit than under the previous benefit regime. During the roll-out of UC since 2013, movements in the Claimant Count have been significantly affected by this expanding eligibility, rather than labour market conditions. This impact has led to the Claimant Count being reclassified to an Experimental Statistic.

Consequently, while some of any movement in the Claimant Count would be because of changes in the number of people who become unemployed, a certain amount of the movement will be because of changes in the number of employed people who are eligible for Universal Credit as part of the government response. We are not able to identify to what extent these two factors have affected the numbers.

As part of the UK government's response to the coronavirus (COVID-19), a number of enhancements were introduced to UC. These may have increased the number of employed people eligible for UC through their earnings falling below income thresholds.

Such claims will generally fall within the work search conditionality within UC.

Consequently, while some of any movement in the Claimant Count would be because of changes in the number of people who become unemployed, a certain amount of the movement will be because of changes in the number of employed people who are eligible for Universal Credit as part of the government response. We are not able to identify to what extent these two factors have affected the numbers.

The Claimant Count increased in May 2020 to 2.8 million (Figure 8). This represents a monthly increase of 23.3% and an increase of 125.9%, or 1.6 million, since March 2020.

Economic inactivity measures people without a job but who are not classed as unemployed because they have not been actively seeking work within the last four weeks and/or they are unable to start work within the next two weeks. Our headline measure of economic inactivity is for those aged between 16 and 64 years.

Since comparable records began in 1971, the economic inactivity rate for all people aged between 16 and 64 years has generally been falling (although it increased during recessions). This is because of a gradual fall in the economic inactivity rate for women (as seen in Figure 9). Over recent years, the economic inactivity rate for men has been relatively flat.

For people aged between 16 and 64 years, for February to April 2020:

• the estimated economic inactivity rate for all people was 20.5%; this is down by 0.3 percentage points on the year but up 0.1 percentage points on the quarter

• the estimated economic inactivity rate for men was 16.4%; this is up by 0.2 percentage points on the year and up 0.4 percentage points on the quarter

• the estimated economic inactivity rate for women was 24.4%; this is down by 0.8 percentage points on the year and down by 0.2 percentage points on the quarter

For March to May 2020, there were an estimated 476,000 vacancies in the UK; this is 342,000 fewer than in the previous quarter (December 2019 to February 2020). This is the largest quarterly fall in the history of the time series.

Contributing most strongly to the quarterly movement were the “wholesale, retail trade and repair of motor vehicles” industrial sector down 67,000 (49.9%) and the “accommodation and food service activities” industrial sector down by 64,000 (70.7%), both record quarterly falls. These industries have been impacted heavily by social distancing measures, with hotels, restaurants and retail stores being closed as a result.

The experimental monthly vacancies data show that the number of vacancies in May has fallen to a record low.

For the the three months to April 2020:

• total pay (nominal) annual growth rate was 1.0%
• regular pay (nominal) annual growth rate was 1.7%
• total pay (real) annual growth rate was negative 0.4%
• regular pay (real) annual growth rate was 0.4%

This is the first time since the three months to January 2018 that we have seen total pay fall in real terms. It is more impacted than that for regular pay because of subdued bonuses, which fell by an average negative 6.8% (in nominal terms) in the three months February to April 2020.

Between February to April 2019 and February to April 2020, average pay growth varied by industry sector. The public sector saw the highest estimated growth, at 3.2% for regular pay, while negative growth was seen in the construction sector, estimated at negative 1.8%. Both the wholesaling, retailing, hotels and restaurants sector and the manufacturing sector saw very weak growth at 0.1% for regular pay. At industry level, those with the lowest pay levels have seen a fall in pay, in particular accommodation and food service activities.

The coronavirus (COVID-19) pandemic continues to disrupt economic activity. In the three months to April 2020, UK gross domestic product (GDP) fell by 10.4%. Output from the production sector fell by 9.5% while that from the construction and the services sectors fell by 18.2% and 9.9% respectively.

Retail sales, Great Britain: April 2020 shows that consumption and expenditure continue to fall. The volume of retail sales fell by a record 18.1% in April 2020 compared with a fall of 5.2% in March 2020, with all types of outlets recording declining sales volumes except for non-store retailing and alcohol and tobacco stores.

The introduction of social distancing and the closure of certain activities has impacted on labour supply and demand, while the support measures introduced (the Coronavirus Job Retention Scheme, the Coronavirus Business Interruption Loan Scheme and the Self-Employed Income Support Scheme) have helped to protect employment.

The latest Labour Force Survey (LFS) estimates for the period February to April 2020 show that employment, unemployment and inactivity remained mostly unaffected by the impact of the pandemic. However, the pandemic has impacted on actual hours worked and vacancy levels. For full-time and part-time workers, average actual weekly hours worked had the largest falls to record lows. The largest quarterly decrease to the vacancies total since the data time series started in 2001 took place in March to May 2020.

Experimental monthly estimates of paid employees and their pay from HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI) data shows that the number of paid employees fell by 612,000 between March 2020 and May 2020.

External surveys also show that conditions in the labour market remain challenging. The UK Household Finance Index for May 2020 shows that individual job security perceptions have fallen drastically across all industries.

The Business impact of coronavirus, analysis over time, UK: Waves 2 to 5 panel, which covers the period between 23 March 2020 and 17 May 2020, shows that the expected workforce size has varied across each wave. Of those firms which were still trading, the proportion that expected a reduction in their workforce size decreased from 30% in Wave 2 to 9% in Wave 5.

The Business Impact of Coronavirus (COVID-19) Survey (BICS) for the period 18 May to 31 May 2020 shows that the Coronavirus Job Retention Scheme (CRJS) was the most common government support scheme applied for, with 81% of all businesses applying. In addition, the HM Revenue and Customs CJRS statistics (PDF, 199KB) show that 1.07 million employers  had made at least one claim for CJRS in the period up to 31 May 2020, covering 8.7 million employments (for example, jobs not individuals).

Total and regular average weekly earnings growth slowed to 1.0% and 1.7% respectively in the three months to April 2020. The Chartered Institute of Personnel Development's Labour Market Outlook for spring 2020, highlights that pay expectations are expected to drop significantly over the next few months, with basic pay increases likely to be frozen in the private sector.

Average weekly earnings

Average weekly earnings measures money paid by employers to employees in Great Britain before tax and other deductions from pay. The estimates are not just a measure of pay rises as they also reflect, for example, changes in the overall structure of the workforce. More high-paid jobs in the economy would have an upward effect on the earnings growth rate.

Economic inactivity

People not in the labour force (also known as economically inactive are not in employment but do not meet the internationally accepted definition of unemployment because they have not been seeking work within the last four weeks and/or they are unable to start work in the next two weeks. The economic inactivity rate is the proportion of people aged between 16 and 64 years who are not in the labour force.

Employment

Employment measures the number of people in paid work or who had a job that they were temporarily away from (for example, because they were on holiday or off sick). This differs from the number of jobs because some people have more than one job. The employment rate is the proportion of people aged between 16 and 64 years who are in employment. A more detailed explanation is available in our guide to labour market statistics.

Unemployment

Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

Vacancies

Vacancies are defined as positions for which employers are actively seeking recruits from outside their business or organisation. The estimates are based on the Vacancy Survey; this is a survey of businesses designed to provide estimates of the stock of vacancies across the economy, excluding agriculture, forestry and fishing (a small sector for which the collection of estimates would not be practical).

Claimant Count

The Claimant Count measures the number of people claiming unemployment related benefits.

The Claimant Count estimates are currently designated as Experimental Statistics because the Universal Credit estimates are still being developed by the Department for Work and Pensions. However, the Claimant Count estimates do provide the best available estimates of the number of people claiming unemployment-related benefits in the UK.

The Claimant Count does not meet the internationally agreed definition of unemployment specified by the International Labour Organization (ILO). The estimates are sourced from the Jobcentre Plus administrative system.

There is a large degree of overlap between the Claimant Count and unemployment, although the latter figures are generally much higher. People who are not claimants can appear among the unemployed if they are not entitled to unemployment-related benefits. For example:

• people who are only looking for part-time work

• young people under 18 years are not usually eligible to claim Jobseeker's Allowance

• students looking for vacation work

• people who have left their job voluntarily

Some people recorded in the Claimant Count would not be counted as unemployed. For example, in certain circumstances people can claim Jobseeker's Allowance or Universal Credit while they have relatively low earnings from part-time work. These people would not be unemployed.

Pay as You Earn (PAYE) Real Time Information (RTI)

These data come from HM Revenue and Customs' (HMRC's) PAYE RTI system. They cover the whole population rather than a sample of people or companies, and they will allow for more detailed estimates of the population. The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. As a result, the series are subject to revisions.

Pay As You Earn (PAYE) is the system employers and pension providers use to take Income Tax and National Insurance contributions before they pay wages or pensions to employees and pensioners. This publication relates to employees only and not pensioners.

A more detailed glossary is available.

Coronavirus (COVID-19)

In response to the developing coronavirus (COVID-19) pandemic, we are working to ensure that we continue to publish economic statistics. For more information, please see COVID-19 and the production of statistics.

We have reviewed all publications and data published as part of the labour market release in response to the coronavirus pandemic. This has led to the postponement of some publications and datasets to ensure that we can continue to publish our main labour market data. This will protect the delivery and quality of our remaining outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus.

For more information on how labour market data sources, among others, will be affected by the coronavirus pandemic, see the statement published on 27 March 2020. A further article published on 6 May 2020, detailed some of the challenges that we have faced in producing estimates at this time.

Our latest data and analysis on the impact of the coronavirus on the UK economy and population is now available on our dedicated COVID-19 webpage. This will be the hub for all special coronavirus-related publications, drawing on all available data.

After EU withdrawal

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, we will continue to produce our labour market statistics in line with the UK Statistics Authority's Code of Practice for Statistics and in accordance with International Labour Organization (ILO) definitions and agreed international statistical guidance.

Pre-release data

The Bank of England were granted exceptional pre-release access to the "Labour market overview, UK: June 2020" bulletin and accompanying tables at 9:00am on Monday 15 June 2020 so that the data were available for the Monetary Policy Committee (MPC) meeting held on that day. See exchange of letters requesting exceptional pre-release access so that data are available for discussion at the MPC.

The employment, unemployment and economic inactivity estimates rely on data collected from the LFS, a survey run by field interviewers with people across the UK every month.

The LFS performance and quality monitoring reports provide data on response rates and other quality related issues for the LFS, including breakdowns of response by LFS wave, region and question-specific response issues. The average weekly earnings and vacancies estimates rely on data collected from surveys of employers.

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the following Quality and Methodology Information (QMI) reports:

LFS QMI

Average weekly earnings QMI

Vacancy Survey QMI

Claimant Count QMI

Future publication dates

Because of a public holiday in Northern Ireland, the July 2020 and July 2021 labour market publication dates have both been moved two days later, moving from the usual Tuesday publication to Thursday for these two months. This change will ensure that users across the UK have the same access to advice from the teams who produce the statistics on the day of release. For further information, please see Statement on changing the release dates of ONS statistics to avoid public holidays.

16 July 2020
11 August 2020
15 September 2020
13 October 2020
10 November 2020
15 December 2020
26 January 2021
23 February 2021
23 March 2021
20 April 2021
18 May 2021
15 June 2021
15 July 2021
17 August 2021
14 September 2021
12 October 2021
16 November 2021
14 December 2021

Accuracy of the statistics: estimating and reporting uncertainty

The figures in this bulletin come from surveys, which gather information from a sample rather than from the whole population. The sample is designed to be as accurate as possible given practical limitations such as time and cost constraints. Results from sample surveys are always estimates, not precise figures. This can have an impact on how changes in the estimates should be interpreted, especially for short-term comparisons.

As the number of people available in the sample gets smaller, the variability of the estimates that we can make from that sample size gets larger. Estimates for small groups (for example, unemployed people aged between 16 and 17 years), which are based on small subsets of the Labour Force Survey (LFS) sample, are less reliable and tend to be more volatile than for larger aggregated groups (for example, the total number of unemployed people).

In general, changes in the numbers (and especially the rates) reported in this bulletin between three-month periods are small and are not usually greater than the level that can be explained by sampling variability. Short-term movements in reported rates should be considered alongside longer-term patterns in the series and corresponding movements in other sources to give a fuller picture.

Further information is available in A guide to labour market statistics.

Where to find data about uncertainty and reliability

Dataset A11 shows sampling variabilities for estimates derived from the LFS.

Sampling variability information for average weekly earnings growth rates is available from the "Sampling Variability" worksheets within datasets EARN01 and EARN03.

The sampling variability of the three-month average vacancies level is around plus or minus 1.5% of that level. Information on revisions is available in the labour market statistics revisions policy.