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PwC comments on latest ONS labour market statistics

15/03/22

Jake Finney, economist at PwC UK, commented:

"The UK posted another strong jobs report today, with the unemployment rate returning to pre-pandemic levels of 3.9% as it fell by 0.2 percentage points. The public sector has driven most of this labour market recovery. Public sector employment is up by around 0.3m since the pandemic started - with the NHS accounting for around half of this rise - while private sector employment is still around 0.8m lower than pre-pandemic levels. This may prove to be a permanent realignment of the UK labour market, as Covid-19 and increased political uncertainty in Europe require a larger state.

"Economic activity increased once again by 0.1 percentage points to 21.3%, which means that around one in five people of working age are no longer seeking work. There are now just under 0.5m fewer people working or seeking work than before the pandemic started - equivalent to a 2% hit to the pool of available workers. This is being primarily driven by older workers, with the pandemic inducing a greater share than normal to retire early, or to leave the labour market due to long-term sickness. We expect that encouraging some of these workers to return back to the labour market will remain high on the Government's agenda for the rest of the year. 

"Going forward, the arrival of Ukrainian refugees could help to ease pressures on employers that are struggling to find staff. At least half of all businesses were experiencing a shortage of workers towards the end of last year, with the manufacturing and transport sectors experiencing the greatest difficulties in finding workers. In the coming weeks, businesses will have an important role to play in helping new arrivals find opportunities that match their skill levels."

 

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Alex Hardy

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