3. Employment, unemployment and inactivity

Employment

The latest Labour Force Survey (LFS) estimates show that in the first calendar quarter (January to March) of 2019, the seasonally-adjusted number of people in employment in the UK increased by 99,000 on the quarter to 32.7 million. Over the same period, the employment rate increased by 0.2 percentage points to 76.1%.

The increase in employment was driven more by the increase in the number of women (114,000) to 15.42 million. The number of employed men decreased by 15,000 on the quarter to 17.28 million. This was the first such decrease since the period August to October 2017.

The employment rate for women increased by 0.4 percentage points to a joint record high of 71.8% in the first calendar quarter of 2019. That for men was largely unchanged, at 80.3%.

People in employment can be classified as employees or as self-employed. This classification excludes people classified as unpaid family workers and those in government-sponsored training programmes. The number of employees increased by 3,000 on the quarter to 27.59 million. In the year to March 2019, the number of employees increased by 168,000.

The number of women who were employees increased by 96,000 on the quarter to reach 13.71 million. The number of men who were employees reduced by 93,000 on the quarter to 13.88 million.

The number of self-employed workers increased by 90,000 on the quarter to reach a record high of 4.93 million. This was the largest quarterly increase since the period March to May 2016. The increase in the number of self-employed workers was driven by men who increased by 78,000 on the quarter to reach a record high of 3.31 million. The number of self-employed women increased by 12,000 on the quarter to reach 1.62 million.

The number of self-employed people has been growing over time. Figure 1 shows the percentage of self-employed workers in total employment. It shows that the proportion of the workforce who are self-employed has trended upward since 2000.

Figure 1: The percentage of self-employment in total employment had an upward trend since 2000 Percentage of self-employment in total employment, UK, seasonally adjusted, March to May 1992 to January to March 2019 Source: Office for National Statistics – Labour Force Survey Download this chart Figure 1: The percentage of self-employment in total employment had an upward trend since 2000 Image .csv .xls

Figure 1 shows that the percentage of self-employment in total employment increased steadily between 2000 and 2014, from an annual average of 11.9% to 14.8%. Between 2015 and the first calendar quarter of 2019, it averaged 14.8%. In the three months to March 2019, the percentage of self-employed workers in total employment was 15.1%. We analyse self-employment in greater detail later.

Employment by nationality

The UK labour market is quite diverse and employs people of different nationalities. The Office for National Statistics publishes data on employment by nationality. The data must not be used as a source of migration data.

The latest estimates show that the number of UK nationals aged 16 years and over who were in employment in the first calendar quarter of 2019 increased by 190,000 to 28.9 million. The number of non-UK nationals aged 16 years and over who were in employment increased by 178,000 to 3.7 million.

The non-UK nationals can be grouped into EU nationals and non-EU nationals. EU nationals constituted 64% of non-UK nationals in employment.

In the three months to March 2019, the employment rate of UK nationals increased by 0.5 percentage points to 76.1%. The employment rate for non-UK nationals increased by 1.2 percentage points to 75.3% over the same period.

The employment rate of non-UK nationals can be disaggregated by country of nationality as shown in Figure 2. The latest data show that the nationalities that had the highest employment rates were South Africans (91.4%), Australians and New Zealanders (82.7%) and the nationals of the United States (78.3%).

Workers with Bangladeshi and Pakistani nationalities had the lowest employment rate (50.9%). A 2018 report by the Department for Work and Pensions (DWP) on ethnicity facts and figures shows the same outcome for Bangladeshi and Pakistani nationalities relative to other ethnic minorities. An earlier study by the DWP (in 2006) on employment barriers faced by Pakistanis and Bangladeshis in Britain examined the reasons for the skewed labour market outcomes.

Figure 2: The nationals of Bangladesh and Pakistan had the lowest employment rates Employment rates of non-UK nationals, not seasonally adjusted, January to March 1997 to January to March 2019 Source: Office for National Statistics – Labour Force Survey Download this chart Figure 2: The nationals of Bangladesh and Pakistan had the lowest employment rates Image .csv .xls

There are several possible reasons for the differences in employment rates of different nationalities. For instance, people from countries where the English language is the main language of communication tend to have higher employment rates. Education, skills and cultural integration may also influence the employment rates of different nationalities. Cultural integration can increase networks that are important for securing employment. In some cases, discrimination and prejudice may result in lower employment rates, especially among ethnic minorities. A research report by the DWP on discrimination in recruitment practice (PDF, 324KB) analysed the different types of ethnic minority penalties in the UK labour market.

Unemployment

Unemployment in the UK has been declining steadily since 2011. In the three months to March 2019, the number of people who were unemployed decreased by 65,000 to 1.3 million. This was the largest quarterly decrease since September to November 2016.

The unemployment rate decreased by 0.2 percentage points to reach 3.8%. This represents continuing firming of the labour market. The unemployment rate for men decreased by 0.2 percentage points to 3.9% and that for women decreased by 0.1 percentage points to reach a record low of 3.7%.

As with employment, we can disaggregate unemployment by nationality. The latest Labour Force Survey data show that the number of UK nationals who were unemployed in the year to March 2019 decreased by 124,000 to 1.1 million. The number of unemployed non-UK nationals increased by 1,000 to 185,000 over the same period.

Categorising non-UK nationals as EU nationals and non-EU nationals shows that the number of unemployed EU nationals fell by 3,000 to 86,000 and that of non-EU nationals increased by 4,000 to 99,000. EU workers had a lower unemployment rate (3.5%) than UK nationals (3.7%) and non-EU nationals had the highest unemployment rate (7.0%).

Economic inactivity

Economic inactivity is one of the three labour market statuses. People who are economically inactive are outside the labour force (that is, they are neither employed nor unemployed). The latest Labour Force Survey data show that in the three months to March 2019, the number of people in the UK who were economically inactive decreased by 23,000 to 8.61 million. Over the same period, the inactivity rate fell by 0.1 percentage points to 20.8%.

The inactivity rate can be disaggregated by sex to show that men’s economic inactivity rate increased (by 0.2 percentage points to 16.3%) and women’s inactivity rate decreased (by 0.3 percentage points to a joint record low of 25.3%) in the first calendar quarter of 2019. The last time that the inactivity rate for men increased was in the three months to August 2018.

The people who were economically inactive can be categorised by reason for inactivity. There are seven categories: students, the long-term sick, the temporarily sick, discouraged workers, those looking after family or home, the retired, and those who were inactive for “other” reasons. In the three months to March 2019, the numbers of students, the long-term sick and the temporarily sick decreased. Over the same period, the numbers of those who retired, those looking after family or home, the discouraged, and those that were inactive for “other” reasons all increased.

The structure of economic inactivity in the three months to March 2019 is illustrated in Figure 3.

Figure 3: Students constituted the largest proportion of economically inactive people Reasons for economic inactivity, UK, seasonally adjusted, January to March 2019 Source: Office for National Statistics – Labour Force Survey Download this image Figure 3: Students constituted the largest proportion of economically inactive people .PNG (25.4 kB) .xls (5.1 kB)

Figure 3 shows that students constituted the largest group of economically inactive people, followed by those looking after home or family and those on long-term sickness. The smallest two groups were discouraged workers and the temporarily sick.