Labour market overview, UK: October 2020

Estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK.

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13 October 2020

The effect of the coronavirus (COVID-19) pandemic on our capacity means we have reviewed the existing labour market releases and will be suspending some publications.

This will protect the delivery and quality of our remaining labour market outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus. More details about the impact on labour market outputs can be found in our statement.

This is an accredited National Statistic. Click for information about types of official statistics.

Contact:
Email Debra Leaker

Release date:
13 October 2020

Next release:
10 November 2020

2. Main points

Early estimates for September 2020 suggest that there is little change in the number of payroll employees in the UK; up 20,000 compared with August 2020. Since March 2020, the number of payroll employees has fallen by 673,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic.

Data from our Labour Force Survey show the employment rate has been decreasing since the start of the coronavirus pandemic, while the unemployment rate and the level of redundancies have been increasing in recent periods. Total hours worked, while still low, show signs of recovering and there are fewer people temporarily away from work.

Vacancies also show signs of a recovery, with a record quarterly increase in the recent period. Annual growth in employee pay strengthened in August 2020 as employees continued to return to work from furlough; this followed strong falls in months since April when growth was affected by lower pay for furloughed employees, and reduced bonuses.

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Labour Force Survey (LFS) estimates in this bulletin have been reweighted to account for the impact of the coronavirus (COVID-19) pandemic on survey interviewing methods.

  • June to August 2020 figures show the unemployment rate and the number of redundancies continue to increase, while the employment rate continues to fall.

  • Although decreasing over the year, total hours worked had a record increase on the quarter, with the June to August period covering a time when a number of coronavirus lockdown measures were eased.

  • In September 2020, 20,000 more people were in payrolled employment when compared with August 2020 and 673,000 fewer people were in payrolled employment when compared with March 2020.

  • The Claimant Count increased in September 2020, reaching 2.7 million; this includes both those working with low income or hours and those who are not working.

  • After a record low of 343,000 vacancies in April to June 2020, there has been an estimated record quarterly increase of 144,000 to 488,000 vacancies in July to September 2020; vacancies remain below the pre-coronavirus (COVID-19) pandemic levels and are 332,000 (40.5%) less than a year ago.

  • Growth in average total pay (including bonuses) among employees for the three months June to August was unchanged from a year ago, while regular pay (excluding bonuses) growth was positive at 0.8%.

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The majority of data in this bulletin come from surveys of households and businesses. It is not possible to survey every household and business each month, so these statistics are estimates based on samples.

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3. Coronavirus and measuring the labour market

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.

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

Latest Labour Force Survey (LFS) estimates are based on interviews that took place from the start of June to the end of August 2020. Interviews during June, July and August relate to the period when a number of the government lockdown measures aimed at protecting businesses and jobs during the coronavirus pandemic started to be eased.

The International Labour Organization (ILO) definition of employment includes those who worked in a job for at least one hour and those temporarily absent from a job. Workers furloughed under the Coronavirus Job Retention Scheme or who are self-employed but temporarily not in work have a reasonable expectation of returning to their jobs after a temporary period of absence. Therefore, they are classified as employed under the ILO definition.

Because of the coronavirus and the suspension of face to face interviewing on 17 March 2020, we had to make operational changes to the LFS, particularly in the way that we contact households for initial interview, which moved to a "by telephone" approach. These changes have resulted in a response where certain characteristics have not been as well represented as previously. This is evidenced in a change in the balance of type of household that we are reaching. In particular, the proportion of households where people own their homes in the sample has increased and rented accommodation households has decreased.

To mitigate the impact of this non-response bias we have introduced housing tenure into the LFS weighting methodology for periods from January to March 2020 onwards. While not providing a perfect solution, this has redressed some of the issues that had previously been noted in the survey results. More information can be found in an article Coronavirus and its impact on the Labour Force Survey. Revisions to headline indicators can be seen in Table X08.

This change in weighting methodology has resulted in revisions to all LFS estimates for the periods January to March 2020 through to May to July 2020 and has consequently had an impact on recent movements for a number of the published series.

For estimates from the LFS in this bulletin (employment, unemployment, economic inactivity, hours worked and redundancies) we focus on movements in the data based on the new weighting methodology; however, we also indicate the impact of the change in weighting by displaying the movements in the data based on the previous weighting methodology in each chart.

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4. Employment, unemployment and economic inactivity

Figure 2: The unemployment rate is rising, and the employment rate is falling

UK employment, unemployment and economic inactivity rates, seasonally adjusted, between June to August 2005 and June to August 2020

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Employment

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 (to which they are expecting to return). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

Estimates for June to August 2020 show 32.59 million people aged 16 years and over in employment, 102,000 fewer than a year earlier and 153,000 fewer than the previous quarter. For June to August 2020:

  • the estimated employment rate for all people was 75.6%; this is 0.3 percentage points down on the year and 0.3 percentage points down on the quarter

  • the estimated employment rate for men was 79.1%; this is 1.1 percentage points down on the year and 0.6 percentage points down on the quarter

  • the estimated employment rate for women was 72.1%; this is 0.4 percentage points up on the year and 0.1 percentage points down on the quarter

Estimates of the number of people in employment on the Labour Force Survey (LFS) are consistent with the International Labour Organization (ILO) definition of employment. Under this definition, employment includes both those who are in work during the reference period and those who are temporarily away from a job. The number of people who are estimated to be temporarily away from work includes furloughed workers, those on maternity or paternity leave and annual leave. Prior to the coronavirus (COVID-19) pandemic there was on average 2 to 2.5 million people temporarily away from work. The number of people temporarily away from work rose to almost 7.3 million people in April to June 2020 but has fallen to 6.4 million people in June to August 2020.

There were also around 192,000 people away from work because of the pandemic and receiving no pay in June to August 2020, this has fallen from 419,000 in April to June 2020.

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.

Estimates for June to August 2020 show an estimated 1.52 million people were unemployed, 209,000 more than a year earlier and 138,000 more than the previous quarter.

For June to August 2020:

  • the estimated UK unemployment rate for all people was 4.5%; this is 0.6 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter

  • the estimated UK unemployment rate for men was 4.9%; this is 0.8 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter

  • the estimated UK unemployment rate for women was 4.0%; this is 0.3 percentage points higher than a year earlier and 0.1 percentage points higher than the previous quarter

Economic inactivity

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.

Estimates for June to August 2020 show 8.63 million people aged between 16 and 64 years not in the labour force (economically inactive), 51,000 fewer than a year earlier and 3,000 fewer than the previous quarter.

For June to August 2020:

  • the estimated economic inactivity rate for all people was 20.8%; this is down by 0.2 percentage points on the year and unchanged on the quarter

  • the estimated economic inactivity rate for men was 16.7%; this is up by 0.4 percentage points on the year and down by 0.1 percentage points on the quarter

  • the estimated economic inactivity rate for women was 24.9%; this is down by 0.7 percentage points on the year and unchanged on the quarter

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5. Hours worked

Between March to May 2020 and June to August 2020, total actual weekly hours worked in the UK saw a record increase of 20.0 million, or 2.3%, to 891.0 million hours. Average actual weekly hours worked saw a record increase of 0.7 hours on the quarter to 27.3 hours.

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6. Redundancies

Redundancies increased in June to August 2020 by 113,000 on the year, and a record 114,000 on the quarter, to 227,000. The annual increase was the largest since April to June 2009, with the number of redundancies reaching its highest level since May to July 2009.

The redundancies estimates measure the number of people who were made redundant or who took voluntary redundancy in the three months before the Labour Force Survey interviews; it does not take into consideration planned redundancies.

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7. Pay As You Earn Real Time Information

Experimental data on the number of payroll employees and median earnings, using HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI), also show current labour market conditions.

Early estimates for September 2020 indicate that there were 28.3 million payrolled employees, a fall of 2.2% compared with the same period in the previous year and a decline of 629,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.1% in September 2020 – equivalent to 20,000 people.

Early estimates for September 2020 indicate that median monthly pay increased to £1,905, an increase of 4.3% compared with the same period of the previous year.

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8. Claimant Count (Experimental Statistics)

These Claimant Count Experimental Statistics relate to 10 September 2020. Enhancements to Universal Credit as part of the UK government's response to the coronavirus (COVID-19) mean that an increasing number of people became eligible for unemployment-related benefit support despite still being in work. Consequently, changes in the Claimant Count will not be wholly because of changes in the number of people who are not in work. We are not able to identify to what extent people who are employed or unemployed have affected the numbers.

More detail on the Claimant Count can be found in the Employment in the UK bulletin.

The Claimant Count increased in September 2020 to 2.7 million. This represents a monthly increase of 1.0% and an increase of 120.3%, or 1.5 million, since March 2020.

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9. Vacancies

For July to September 2020, there were an estimated 488,000 vacancies, which is a record quarterly increase of 144,000 vacancies from the record low in April to June 2020. The increase is driven by small businesses (49 or fewer employees). Despite the record quarterly increase, vacancies remain below the pre-coronavirus (COVID-19) pandemic levels and are 332,000 (40.5%) less than a year ago.

While the experimental single-month estimates should not be considered accurate estimates of vacancies in the reported months, they do indicate for August 2020 an increase of approximately 55% in the estimated vacancies compared with the record low in May 2020. However, estimated vacancies for August 2020 were still around 40% less than in February 2020.

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10. Earnings growth

In June to August 2020, the rate of annual pay growth was unchanged for total pay but positive 0.8% for regular pay. The difference between the two measures is because of subdued bonuses, which fell by an average negative 15.3% (in nominal terms) in the three months June to August 2020.

The rate of growth stood at 2.9% in December 2019 to February 2020 immediately prior to the coronavirus (COVID-19) pandemic, it then slowed sharply to negative 1.2% for total pay and negative 0.1% for regular pay before some increase in July and August.

Between June to August 2019 and June to August 2020, average pay growth varied by industry sector. The public sector saw the highest estimated growth, at 4.1% for regular pay. Negative growth was seen in the construction sector, estimated at negative 5.3%, the wholesaling, retailing, hotels and restaurants sector, estimated at negative 1.8%, and the manufacturing sector, estimated at negative 0.9%. This is, however, an improvement over the growth rates during May to July 2020.

In real terms, total pay is growing at a slower rate than inflation, at negative 0.8%. Regular pay growth in real terms is now positive, at 0.1%.

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11. Labour market data

Because of changes in the Labour Force Survey (LFS) weighting methodology, we were not able to update all tables this month, see article. Those not updated include:

  • A06 Educational status and labour market status for people aged from 16 to 24 years
  • A11 Labour Force Survey sampling variability
  • HOUR02 Usual weekly hours worked
  • HOUR03 Average hours worked by industry
  • UNEM01 Unemployment by age and duration
  • UNEM03 Unemployment by previous industrial sector
  • X01 LFS Single month estimates
  • X05 Comparison of unemployment and the claimant count
  • X07 Weekly LFS estimates

These will be updated in our next Labour market publication on 10 November 2020.

We apologise for any inconvenience.

Summary of labour market statistics
Dataset A01 | Released 13 October 2020
Estimates of employment, unemployment and other employment-related statistics for the UK.

Employment, unemployment and economic inactivity
Dataset A02 SA | Released 13 October 2020
Estimates of UK employment, unemployment and economic inactivity for people aged 16 years and over and people aged between 16 and 64 years based on the Labour Force Survey (LFS).

Average weekly earnings
Dataset EARN01 | Released 13 October 2020
Estimates of Great Britain earnings growth based on the Monthly Wages and Salaries Survey.

Vacancies by industry
Dataset VACS02 | Released 13 October 2020
Estimates of the number of UK job vacancies for each industry, based on a survey of businesses.

Real Time Information statistics
Dataset Real Time Information statistics | Released 13 October 2020
Earnings and employment statistics from Pay As You Earn (PAYE) Real Time Information (RTI) (Experimental Statistics) seasonally adjusted.

Claimant Count
Dataset CLA01 | Released 13 October 2020
Experimental estimates of the Claimant Count including Jobseeker's Allowance and out of work Universal Credit claimants.

Labour Force Survey weekly estimates
Dataset X07 | Released 13 October 2020
LFS weekly estimates of employment, unemployment, economic inactivity and hours in the UK. All estimates are calculated from highly experimental weekly LFS datasets.

View all related data on the related data page. Alternatively, Nomis provides free access to the most detailed and up-to-date UK labour market statistics from official sources.

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12. Glossary

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 A 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 (DWP). However, the Claimant Count estimates 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 aged under 18 years, who 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) Pay As You Earn (PAYE) Real Time Information (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.

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.

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13. Measuring the data

Coronavirus

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 and ensure 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. A blog published in July 2020 by Jonathan Athow, Deputy National Statistician for Economic Statistics, explains some of the differences between sources.

Our latest data and analysis on the impact of the coronavirus on the UK economy and population are available on our dedicated coronavirus web page. This is 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.

The employment, unemployment and economic inactivity estimates rely on data collected from the Labour Force Survey (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 QMI reports:

Future publication dates

10 November 2020
15 December 2020
26 January 2021
23 February 2021
23 March 2021
20 April 2021

Sampling variability

Because of the methodology changes applied to the Labour Force Survey this month, the sampling variability data are not available.

This will be updated with the next Labour market release on 10 November 2020.

We apologise for any inconvenience.

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14. Strengths and limitations

Accuracy of the statistics: estimating and reporting uncertainty

Some of 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. Therefore, the estimates presented in this bulletin contain some uncertainty and are 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 (not updated in October 2020, see section 11) 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.

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Contact details for this Statistical bulletin

Debra Leaker
labour.market@ons.gov.uk
Telephone: +44 (0)1633 455400