Rishi Sunak not letting the fine details rain on his parade: Ian McConnell

WHAT was probably most striking in this week’s UK labour market figures was a fall in the number of full-time employees, as part-timers continued to drive growth in payrolls.

And this is yet another reason – while the UK unemployment picture remains far better than most could probably have dared to hope for in spring last year when the reality of the coronavirus pandemic became clear – for continued caution on the threat to people’s livelihoods.

The fine detail of the latest labour market data, published on Tuesday by the Office for National Statistics, provides plenty of reason not to get carried away on a tide of optimism.

Against a backdrop of surging prices, with ONS data on Wednesday showing annual UK consumer prices index inflation jumped from 4.2 per cent in October to a 10-year high of 5.1% in November, the quality and security of people’s jobs are crucial considerations when assessing the health of household finances.

The rise in part-time working was also highlighted by the ONS last month when it published the previous set of labour market statistics. The ONS also flagged an increase in zero-hours contracts at that stage.

However, in the figures published last month, there was a rise in full-time employees, even if this was eclipsed by the surge in part-timers.

In this week’s data, the number of full-time employees in the August to October period was, at 21.44 million, down by 51,000 on the figure for May to July.

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In stark contrast, the number of employees working part-time was, in the August to October period, at 6.644 million, up by 217,000 on the preceding three months.

The ONS said: “The number of part-time workers decreased strongly during the coronavirus pandemic, but has been increasing since April to June 2021, driving the quarterly increase in employment.”

In last month’s figures, comparing the July to September period with the three months from April to June inclusive, the number of full-time employees was up 63,000. The number of employees working part-time showed a rise of 168,000.

So this week’s figures are certainly notable in terms of the momentum of the shift to part-time roles, as well as the drop in full-time employee positions.

These are very important factors to consider when trying to work out what has been something of a labour market puzzle in recent times.

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However, Chancellor Rishi Sunak was not letting any fine details rain on his parade in his response to this week’s labour market figures.

Then again, given the Conservatives’ extremely poor economic track record since they came to power in 2010 and the great damage from the Brexit folly, we should perhaps not be surprised when Cabinet ministers attempt to make maximum political capital out of anything which could be portrayed as positive.

At least the headline labour market numbers were positive. So in that sense Mr Sunak’s response is not so frustrating as, for example, bizarre efforts to portray Brexit as a positive, when all the figures show it has been extremely detrimental and all the evidence points to it continuing to be so.

The latest ONS figures show the unemployment rate on the International Labour Organisation measure decreased by 0.4 percentage points to 4.2%, comparing the August to October period with the preceding three months. However, the inactivity rate increased by 0.1 percentage points to 21.2%.

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The employment rate increased by 0.2 percentage points to 75.5%. The ONS noted that its most timely estimate of payrolled workers indicated that in November there were 29.4 million employees in the UK, up 257,000 on the revised figure for October and 424,000 higher than in February 2020, before the pandemic took hold. This estimate is based on data from HM Revenue and Customs’ Pay As You Earn (PAYE) real-time information system.

The number of job vacancies continued to rise in the September to November period, the ONS noted, reaching a new record of 1.219 million, an increase of 434,500 from the “pre-coronavirus January to March 2020 level”.

The ONS added that 13 of the 18 industry sectors were showing record highs for vacancies. However, over the quarter, the rate of growth in vacancies continued to slow down. And the experimental single-month estimates showed their first reduction in vacancy numbers since February 2021.

The weakening of the position in the most recent month might be another reason for caution, from the viewpoint of labour market opportunities as we look ahead to next year.

In any case though, high vacancy figures, while indicating opportunities, can also be a negative if what they are highlighting is companies’ inability to find staff amid the UK’s skills and labour shortage crisis, which has been fuelled by Brexit. Such shortages are not a sign of a healthy labour market, and weigh on economic activity.

Mr Sunak declared: “The jobs outlook remains strong thanks to our £400 billion economic support package, plan for jobs and fantastic vaccine programme; the unemployment rate fell to 4.2%, employee numbers grew at a record rate in November and redundancies are below pre-pandemic levels.”

He added: “To keep safeguarding our economic recovery and the lives and livelihoods of the British people, I am now calling on everyone to keep playing their part and get boosted now.”

The UK taxpayer-funded coronavirus job retention scheme implemented by the UK Government has preserved large numbers of jobs, although Mr Sunak’s tardiness in extending it in autumn last year will have cost employment and the complete ending of the programme this September appeared premature.

The ONS said this week: “It is possible that those made redundant at the end of the furlough scheme will be included in the real-time information data for a few further months, while they work out their notice period. However, responses to our business survey suggest that the numbers made redundant were likely to be a small share of those still on furlough at the end of September 2021.”

The absence of furlough support will surely be in the minds of many as the Omicron variant causes further woe for the UK, and for other countries around the world.

It was interesting to see the International Monetary Fund recommend this week that the UK should be ready to deploy furlough support if a rapid spread of coronavirus forces renewed lockdown of parts of the economy.

The IMF said: “The major risk is new Covid-19 waves and the uncertainty they bring. Omicron could extend global demand-supply imbalances and inflationary pressures beyond projections, but if it or a future outbreak is more virulent this could weigh on confidence and demand, with disinflationary impact.”

It added: “In the event of a virulent Covid-19 wave requiring widespread mandated closures, the authorities should be ready to redeploy a subset of the most successful previous exceptional programmes, such as a furlough scheme and targeted support to the most vulnerable households and small businesses.”

The current absence of a furlough scheme and other key support measures amid the huge uncertainty created by Omicron will be a major worry for many businesses and households.

And the fall in the number of full-time employees, even before Omicron emerged, is a reason for caution, no matter how celebratory the tone of Mr Sunak.

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