Job figures reveal more people working, but fewer looking for work

However, the number of employees increased on the quarter to another record high. Job-to-job moves reached record numbers in October to December 2021, driven by resignations.

The most recent estimate of payrolled employees shows another monthly increase (up 108,000) in January 2022 to a record 29.5 million.

Following from this the Office of National Statistics data revealed the unemployment rate decreased by 0.2 percentage points on the quarter to 4.1 per cent, while the economic inactivity rate increased by 0.1 percentage points to 21.2 per cent.

The increase in economic inactivity since the start of the coronavirus pandemic was largely driven by those who are economically inactive because they are students or for “other” reasons. In the latest three-month period however, those who are inactive because they are students continued to decrease, while the increase was driven by those who are inactive because of long-term sickness and “other” reasons.

The number of job vacancies in November 2021 to January 2022 rose to a new record of 1,298,400, an increase of 513,700 from its pre-coronavirus January to March 2020 level. However, the rate of growth in vacancies continued to slow down. The ratio of vacancies to every 100 employee jobs continued to rise, reaching a record high of 4.3 in November 2021 to January 2022, with the majority of industry sectors displaying record high ratios.

Jake Finney, economist at PwC UK, said the job figures suggest that, despite low unemployment rates, 2022 will be defined by a shrinking labour market and a real wage squeeze. 

“Around 112,000 people dropped out of the labour market in the three months to December. This was driven by a continued rise in the number of people with long-term sickness, particularly among older workers, with long Covid expected to be the primary cause,” he said.

“As a result, there are now around 0.4m fewer people either working or seeking work than before the pandemic started – equivalent to a 1.1 per cent hit to the pool of available workers. This will have knock-on implications for the UK’s economic growth potential. 

“The pay squeeze continued to tighten, as workers saw their real pay falling by 1.2 per cent in the year to December. This is the third time workers have seen their pay squeezed in just over a decade and we expect that this will continue throughout 2022 as nominal pay rises are unable to keep up with surging inflation. 

“On a more positive note, today’s data shows that the UK labour market has been resilient to the Omicron variant. The unemployment rate fell to 4.1 per cent and vacancies grew once again, showing that employers were willing to keep hiring despite Omicron. Total hours worked increased by 0.1m despite consumer-facing businesses facing high levels of cancellations and many workers having to self-isolate.”