Report Highlights:
- In September to November 2024, 33.78 million people were employed in the UK.
- The unemployment rate for the same period was 4.4%, with 1.57 million unemployed.
- 9.30 million people were economically inactive in September to November 2024.
- The number of job vacancies fell to 812,000 in October to December 2024.
- Average wages increased by 3.2% including bonuses and 3.4% excluding bonuses in real terms.
Understanding the UK Labor Market: Key Indicators and Changes
The UK labor market experienced a mix of changes in employment, unemployment and economic activity.
- In September to November 2024, 33.78 million people aged 16+ were employed, with an employment rate of 74.8% for those aged 16-64.
- Employment levels increased by around 440,000 over the last year, but the employment rate fell slightly.
- The UK unemployment rate was 4.4%, with 1.57 million people aged 16+ unemployed.
- Unemployment levels increased by around 190,000 over the last year, and the unemployment rate also increased.
- 9.30 million people aged 16-64 were economically inactive, and the inactivity rate was 21.6%.
- Both inactivity levels and the inactivity rate fell slightly in the last year.
- The number of job vacancies fell to 812,000 in October to December 2024.
- Average wages increased in real (inflation-adjusted) terms by 3.2% including bonuses and 3.4% excluding bonuses in the three months to November 2024.
- Nominal wages increased by 5.6% including bonuses and 5.6% excluding bonuses.
- The employment rate was 74.1% in the period up to May 2024, which is a 1.1 percentage point decrease over the last year.
- Unemployment reached 4.4% in the period up to May 2024, an increase of 0.4 percentage points.
- Economic inactivity was at 22.1% up to May 2024, an increase of 0.8 percentage points.
- The total number of people aged 16 to 64 who are out of work rose by 510,000 over the last year.
- Unemployment rose by 120,000 in the last year.
- Economic inactivity rose by 390,000 over the last year.
- The number of people in employment has fallen by 300,000 in the last year.
- The employment rate stood at 74.8% in the period up to July 2024, unemployment at 4.1% and economic inactivity at 21.9%.
- There was an increase of 150,000 in the level of employment in the last year.
- There was an increase of 310,000 in the level of economic inactivity in the last year.
Data Reliability Concerns with the Labour Force Survey
- In recent years, fewer people have been responding to the LFS, challenging data reliability.
- The Office for National Statistics (ONS) reintroduced LFS data in February 2024 after issues with data reliability between October 2023 and January 2024.
- The ONS has stated that reintroduced LFS estimates should be treated with additional caution.
- Due to time constraints, data has only been reweighted from January to March 2019 onwards, creating a break in the data.
- The ONS remodelled headline data back to June to August 2011.
- The ONS boosted the LFS sample size in October 2023 and January 2024 to improve reliability.
- The ONS said there might be instability in the LFS as changes to data collection won’t be fully included until May 2025.
- In December 2024, the ONS reweighted some LFS data using new population estimates, indicating an extra 484,000 people aged 16-64 in the UK in April to June 2024.
- This reweighting resulted in employment levels being 402,000 higher in April to June 2024 than in previously published data.
- Reweighted data showed unemployment to be 30,000 higher in April to June 2024 compared to previously published data.
- The reweighting did not significantly affect the unemployment rate in April to June 2024.
- Economic activity among those aged 16-64 was 60,000 higher in April to June 2024 in the reweighted data than in previously published data.
- The inactivity rate was 0.1 percentage points lower in the reweighted April to June 2024 data.
- Between October 2023 and January 2024, the ONS published headline data using PAYE and claimant count data to adjust LFS data from previous months.
- On 5 February, the ONS published the reweighted Labour Force Survey data for the months it had previously been unable to publish.
Employment Trends and Analysis
Here is some information from the sources about employment trends and analysis, with statistics included in each bullet point:
- In September to November 2024, there were 33.78 million people aged 16+ employed in the UK.
- The employment rate for people aged 16-64 was 74.8%.
- Employment levels increased by around 440,000 over the last year.
- The employment rate fell slightly.
- The employment rate remained close to 75% since the end of 2021.
- This is below the pre-pandemic employment rate of 75.9% in January to March 2020.
- The increase in employment of 438,000 over the year to September to November 2024 was measured alongside an increase of 95,000 payrolled employees in the year to November 2024, and an increase of 364,000 jobs in the year to September 2024.
- The Bank of England noted in May 2024 that Workforce Jobs data showed employment growing by around 4% since 2019 while LFS data showed employment growing by 0.6% over the same period.
- Reweighting in December 2024 brought the two estimates closer together: Workforce jobs showed growth of 3.3% between September 2019 and September 2024, and the LFS showed employment growth of 2.6% between August to October 2019 and the same period in 2024.
- In March to May 2024, the employment rate was 74.1%.
- WFJ reported that employment was up by 500 thousand in the year ending April-June 2024.
- PAYE data reported 185 thousand more employees over the same period.
- The LFS reported a fall in employment of 70 thousand up to the April-June quarter.
- July 2024 LFS figures show a rise in employment levels.
Looking at employment by type:
- The increase in employment levels over the last ten years has been driven by full-time workers.
- In September to November 2024, 25.36 million people were employed on a full-time basis while 8.42 million were employed on a part-time basis.
- The number of full-time workers continued to increase after the outbreak of the pandemic, while there was a sharp fall in part-time employment.
- The increase in employment levels in the last year was driven by an increase in full-time employment.
- In September to November 2024, there were 29.20 million people working as employees, while a further 4.40 million were self-employed.
- **The number of employees continued to increase after the start of the pandemic, driven by full-time employees. **
- In September to November 2024, there were around 1.5 million more full-time employees compared to pre-pandemic levels.
- The number of self-employed workers fell following the start of the pandemic and remained around 500,000 below pre-pandemic levels in September to November 2024.
Analysis of employment trends suggests:
- A tight labor market, with low unemployment and high vacancies in 2022 and 2023, made recruitment difficult.
- This tightness contributed to nominal wage growth and upward pressure on inflation.
- Demand for labor has slowed, leading to a loosening labor market and a fall in wage growth.
- Vacancy levels remain above pre-pandemic levels.
- The Office for Budget Responsibility expects the employment rate to rise slightly over the next year before falling in subsequent years until 2029.
- The unemployment rate is expected to fall slightly in the next year, before rising towards the end of the decade.
Unemployment and Economic Inactivity: Key Factors
- In September to November 2024, there were 1.57 million unemployed people in the UK, and the unemployment rate was 4.4%. Unemployment levels increased by around 190,000 over the last year, and the unemployment rate also increased.
- In March to May 2024, the unemployment rate was 4.4%.
- Looking across the countries and regions of the UK in September to November 2024, the unemployment rate was highest in London (6.2%) and lowest in Northern Ireland (1.7%).
- There were 112,000 redundancies in September to November 2024. Redundancies rose sharply during the coronavirus pandemic and then fell equally sharply as restrictions were lifted.
- Redundancies fell to around 52,000 in March to May 2022, the lowest level since records began in 1995.
- In September to November 2024, 9.30 million people aged 16-64 in the UK were economically inactive. The inactivity rate was 21.6%. Both inactivity levels and the inactivity rate fell slightly over the last year.
- In March to May 2024, the economic inactivity rate was 22.1%.
- Although inactivity fell over the last year, the number of economically inactive people in September to November 2024 remained 670,000 higher than pre-pandemic levels in January to March 2020.
- Long-term sickness and being a student were the leading reasons for economic inactivity in September to November 2024, with 30% of economically inactive people citing long-term illness and 26% citing student status as the reason for their inactivity.
- In July to September 2024, 10.8% of young people were not in full-time education and were economically inactive, the highest proportion recorded.
- The number of economically inactive people with a long-term illness reached its highest recorded level in February to April 2024 since the ONS series began in 1993.
- In December 2024, 1.74 million people claimed unemployment-related benefits, unchanged from November 2024 and 182,000 more than December 2023.
- The claimant count was 514,000 higher in December 2024 than in March 2020, when the first coronavirus lockdown began.
Key factors influencing unemployment and economic inactivity:
- The coronavirus pandemic had a significant impact on unemployment and economic inactivity, with both measures rising sharply during the early stages of the pandemic.
- The UK’s tight labor market in 2022 and 2023, characterized by low unemployment and high vacancies, contributed to difficulties in recruitment and upward pressure on wages and inflation.
- Long-term sickness is a major factor driving economic inactivity, with the number of people inactive due to long-term illness rising to record levels.
Demographic Breakdown of the UK Labour Market
Here is some information from the sources about the demographic breakdown of the UK labor market, with statistics included in each data point:
Women and Men
- In September to November 2024, 16.36 million women and 17.42 million men were employed.
- The female employment rate was 71.8%, and the male employment rate was 78.0%.
- Employment rates and unemployment rates are higher for men than women, but the gap in unemployment is now small.
- Economic inactivity rates are higher for women: in September to November 2024, 25.0% of women aged 16-64 were not in work and not looking for work, compared to 18.1% for men.
- The gap between male and female rates has been narrowing due to a decrease in the number of economically inactive women.
- The flow from inactivity to employment for women has meant that the employment gap between men and women has also been closing in recent years.
- Increases in the employment rate for women in recent years are partially attributed to changes to the State Pension age.
Young People
- In September to November 2024, 628,000 young people aged 16-24 were unemployed, a rate of 14.5%.
- In the months following the start of the pandemic, there was a large fall in employment levels for young people aged 16-24, followed by a rise in unemployment.
- Unemployment levels for young people fell after that to below pre-pandemic levels before rising again. In 2023 and 2024 it has generally been similar to pre-pandemic levels.
- The share of young people neither in full-time education nor in the labor force has been rising over the last three years and reached its highest ever rate earlier this year.
- Recent months had seen the figures start to improve, but data shows a significant deterioration with the proportion of young people not in full-time education and economically inactive back up to 10.8%.
Ethnic Groups
- The ONS has not reweighted labor market data by ethnic group, so figures in this section should be treated with additional caution.
- In July to September 2024, the unemployment rate for minority ethnic groups (8.1%) was more than double the rate for White ethnic groups (3.6%).
- In July to September 2024, unemployment rates were highest for people from Mixed and multiple ethnic groups (13.9%) and Pakistani (10.2%) ethnic groups, and lowest for White ethnic groups (3.6%).
- The UK unemployment rate was 4.4% in the same period.
- The gap between unemployment for White ethnic groups and minority ethnic groups was gradually narrowing before the pandemic, but this trend was reversed by the pandemic.
- Unemployment rates for minority ethnic groups increased from 6.3% in the pre-pandemic quarter January to March 2020 to a high of 9.8% in October to December 2020.
- In comparison, the unemployment rate for people from a White ethnic group increased from 3.6% to a high of 4.6%.
Nationality
- The ONS has not reweighted labor market data by nationality, so figures in this section should be treated with additional caution.
- In July to September 2024, the employment rate for all non-UK nationals was 76.2%, compared to 74.7% for UK nationals.
- Nationals of EU countries had an employment rate of 80.4%, compared to 73.1% for non-EU nationals.
- In July to September 2024, there were 4.63 million people working in the UK who were not UK nationals, 13.9% of all people in employment.
- This included 2.01 million people who were nationals of the 27 EU countries (6.3%) and 2.55 million people who were nationals of countries outside the EU (7.6%).
- There were large increases in the number of EU nationals working in the UK up to the end of 2017, but those numbers have since fallen due to Brexit and the coronavirus pandemic.
- The number of non-EU nationals working in the UK has been steadily increasing in recent years.
- Compared to the pre-pandemic quarter of January to March 2020, there was a fall in employment of around 350,000 for UK nationals and a fall of over 300,000 for EU nationals.
- There was an increase for non-EU nationals of over a million, meaning the increase in employment for non-UK nationals was around 750,000.
Disability
- The ONS has not reweighted labor market data by disability status, so figures in this section should be treated with additional caution.
- In July to September 2024, the employment rate for disabled people was 54.4%, and the rate for people who are not disabled was 81.9%, resulting in a disability employment gap of 27.5 percentage points.
- Between July to September 2014 and July to September 2024, the disability employment gap reduced by almost 6 percentage points because the employment rate for disabled people has been rising faster than the employment rate for people who are not disabled.
- The gap increased slightly during the coronavirus pandemic.
Sources:
- https://www.employment-studies.co.uk
- https://researchbriefings.files.parliament.uk
- https://www.employment-studies.co.uk