MNI DATA IMPACT: UK Employment Up, Earnings Soar

UK employment jumped for the second straight month, while earnings growth accelerated dramatically as lower-paying jobs dropped out of the workforce, according to the most recent employment report released on Tuesday by the Office for National Statistics.

Employment rose by 83,000 between December and January, according to PAYE data compiled by HMRC, the biggest gain since January 2015, following a 73,000 increase the previous month (revised upward from the initially-reported 52,000 increase). However, employment remained 726,000 below pre-pandemic levels in February.

Total earnings surged by an annual rate of 4.7% in the final quarter of 2020, from 3.6% in the previous period, the fastest pace since the first quarter of 2008, with deferred bonus payments lifting December compensation. However regular earnings jumped by 4.1%, also the highest since January-May 2008. Statisticians believe the changing composition of the post-Covid work force accounted for 1.8% of the increase in earnings growth.

REAL EARNINGS SURGE

Real total earnings increased by an annual rate of 3.8%, up from 3.0% in the three months to November, while real regular earnings rose by 3.3% from 2.8%. Both measures of real earnings hit a record in absolute terms, with total pay rising above its pre-financial crisis level for the first time.

Employment fell by 115,000 in the final quarter of 2020, according to LFS data, taking the jobless rate to 5.1%, the highest level since the first quarter of 2016. However, Bank of England officials have consistently asserted that the LFS headline rate under-estimates the true level of post-pandemic joblessness.

The average work week rose to 30.2, the highest since the first quarter of 2020, from 28.5 in the third quarter. However, hours worked remain below the 31.9 held in the final three months of 2019.

VACANCIES UP AGAIN

Vacancies rose by 64,000 in the three months to January to 599,000, the highest since the three months to April of 2020. Vacancies remain 211,000 below the same level of last year.

Labour productivity -- measured by output per hour -- declined by 4.5% between the third and fourth quarters, the biggest fall on record in a series dating back to 1978. Output per hour declined by 1.1% over the same period of 2019, the largest declined since the fourth quarter of 2012.