By Darwin Friend, policy analyst
Today the Office for National Statistics (ONS) has released its UK labour market statistics for April 2021. They reveal some concerning figures demonstrating the need for the government to rescue struggling sectors, like hospitality, by extending the five per cent VAT reduction until April 2023.
The key points from the stats released today included:
- 56,000 fewer people were in payrolled employment in March 2021 when compared with February 2021.
- The UK employment rate was estimated at 75.1%, 1.4 percentage points lower than a year earlier.
- There were an estimated 607,000 job vacancies in January to March 2021, which is a 22.7% fall compared with a year ago.
- Growth in average total pay (including bonuses) among employees for the three months December 2020 to February 2021 was 4.5%, and growth in regular pay (excluding bonuses) was 4.4%; it is estimated that the underlying wage growth is around 2.5% for total and regular pay.
Early estimates for March 2021 indicate that there were 28.2 million payrolled employees, a fall of 2.8 per cent compared with the same period last year and a decline of 813,000 people over the last year. Compared with the previous month, the number of payrolled employees decreased by 0.2% in March 2021 - equivalent to 56,000 people losing their jobs.
The 813,000 decrease in payrolled employees since March 2020 includes:
- 355,000 employees working in the accommodation and food service activities sector
- 223,000 employees living in London
- 436,000 (53.7%) aged under 25 years
While the unemployment rate has fallen marginally, these figures show that the impact of coronavirus continues to be felt most severely by young people, who are more often reliant on jobs in industries that have been shut.
For the quarter December 2020 to February 2021, 32.43 million people aged 16 years and over were in employment. This is 643,000 fewer than last year and down 73,000 on the quarter. As lockdown restrictions ease, it is essential for the economy that these figures reverse. After all, revenues into the Treasury must rise in order to deal with the public debt, which has spiralled during the pandemic.
After the initial lockdown, there was understandably a sharp increase in the number of people stating that they were temporarily away from paid work, with almost 28 per cent in the final week of April 2020. As the pandemic has continued this number has fallen. However it has not fallen below 10 per cent, and with the onset of further restrictions, it increased again in November and December 2020. For the first two months of 2021, it averaged around 15 per cent, illustrating the longevity of the issue. It is likely that once the furlough scheme is wrapped up, many employees currently classed as temporarily away from work will sadly not have jobs to come back to.
A recent survey showed that 19 per cent of the business workforce was on furlough, or approximately 6 million workers. The arts, entertainment and recreation industry (58 per cent) and the accommodation and food service activities industry (51 per cent) were sustaining the highest proportions of furloughed workers. While the first shoots of recovery in some of these sectors are beginning to be seen, more needs to be done - especially as the arts industry (such as galleries and museums) is unable to re-open until May. Furthermore, while hospitality industries are currently able to open outside, this is not an option for all venues, with CGA estimates showing that less than 40% have outdoor space.
The stats also tell another tale. The public sector has continued to grow throughout the pandemic, with the most recent statistics from December 2020 showing an increase of 30,000 public sector employees compared with September 2020 and an extra 160,000 when compared to December 2019. In the short-term response to coronavirus this is understandable, however as the UK extracts itself from lockdown, we need to see private sector jobs being created and economic growth rising. Simply put, public sector job growth and the ongoing furlough scheme are no substitute for the terrible unemployment we now see in struggling sectors like hospitality.
Fundamentally, the ONS figures are a stark reminder that the government needs to focus on getting people back to work and stimulating economic growth. With Britain’s tax burden at a 70 year high, this can only be done by committing to tax cuts, eliminating red tape and supporting taxpayers and businesses.