Labour market overview, UK: January 2021

Estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK.

This is not the latest release. View latest release

26 January 2021

The effect of the coronavirus (COVID-19) pandemic on our capacity means we have reviewed the existing labour market releases and have suspended some publications.

This will protect the delivery and quality of our remaining labour market outputs as well as ensuring we can respond to new demands as a direct result of the coronavirus. More details about the impact on labour market outputs can be found in our statement.

This is an accredited National Statistic. Click for information about types of official statistics.

Cyswllt:
Email Debra Leaker

Dyddiad y datganiad:
26 January 2021

Cyhoeddiad nesaf:
23 February 2021

2. Main points

Since February 2020, the number of payroll employees has fallen by 828,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic.

Data from our Labour Force Survey (LFS) show a large increase in the unemployment rate while the employment rate continues to fall. The number of redundancies reached a record high in September to November 2020, although the weekly data show it has dropped from the peak in September.

Although decreasing over the year, total hours worked increased from the low levels in the previous quarter, even with the September to November period covering a time when a number of coronavirus lockdown measures were reintroduced. The number of people temporarily away from work has fallen since its peak in April and May 2020, although it has risen slightly in November. The number of people away from work because of the pandemic and receiving no pay has also fallen since the start of the pandemic but risen slightly over the last month.

The vacancies recovery has slowed in October to December 2020 and these are still below the levels seen before the impact of the coronavirus pandemic.

Annual growth in average employee pay continued to strengthen, but this growth is increasingly being driven by compositional effects of a fall in the number and proportion of lower-paid employee jobs. Current average pay growth rates are being impacted upwards by a fall in the number and proportion of lower-paid jobs compared with before the coronavirus pandemic; it is estimated that underlying wage growth – if the effect of this change in profile of jobs is removed – is likely to be under 2%.

  • The UK employment rate, in the three months to November 2020, was estimated at 75.2%, 1.1 percentage points lower than a year earlier and 0.4 percentage points lower than the previous quarter.

  • The UK unemployment rate, in the three months to November 2020, was estimated at 5.0%, 1.2 percentage points higher than a year earlier and 0.6 percentage points higher than the previous quarter.

  • In the three months to November 2020, the redundancy rate reached a record high of 14.2 per thousand.

  • Early estimates for December 2020 indicate that the number of payrolled employees fell by 2.7% compared with December 2019, which is a fall of 793,000 employees; since February 2020, 828,000 fewer people were in payrolled employment.

  • The Claimant Count increased slightly in December 2020, to 2.6 million; this includes both those working with low income or hours and those who are not working.

  • There were an estimated 578,000 vacancies in the UK in October to December 2020; this is 224,000 fewer than a year ago and 81,000 more than the previous quarter.

  • Growth in average total pay (including bonuses) among employees for the three months September to November 2020 increased to 3.6%, and growth in regular pay (excluding bonuses) also increased to 3.6%.

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The majority of data in this bulletin come from surveys of households and businesses. It is not possible to survey every household and business each month, so these statistics are estimates based on samples.

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3. Employment, unemployment and economic inactivity

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LFS responses are weighted to official population estimates and projections that do not currently reflect the impact of the COVID-19 pandemic. The Labour Force Survey (LFS) is not designed to measure changes in the levels of population or long-term international migration. We are analysing the population totals used in the weighting process and may make adjustments if appropriate. Rates published from the LFS remain robust and reliable, however levels and changes in levels should be used with caution.

Figure 1: In the three months to November, there was a large increase in the unemployment rate while the employment rate continues to fall

UK employment, unemployment and economic inactivity rates, seasonally adjusted, between September to November 2005 and September to November 2020

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Employment

Employment measures the number of people aged 16 years and over in paid work and those who had a job that they were temporarily away from (to which they are expecting to return). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

Estimates for September to November 2020 show 32.50 million people aged 16 years and over in employment, 398,000 fewer than a year earlier. This was the largest annual decrease since December 2009 to February 2010. Employment decreased by 88,000 on the quarter.

For people aged between 16 and 64 years, for September to November 2020:

  • the estimated employment rate for all people was 75.2%; this is 1.1 percentage points down on the same period the previous year and 0.4 percentage points down compared with the previous quarter (June to August 2020)

  • the estimated employment rate for men was 78.4%; this is 1.9 percentage points down on the same period the previous year and 0.7 percentage points down on the quarter

  • the estimated employment rate for women was 72.0%; this is 0.4 percentage points down on the same period the previous year and 0.1 percentage points down on the quarter

The single-month and weekly estimates of the employment rate suggest that the rate has been largely flat during the three-month period.

Estimates of the number of people in employment on the Labour Force Survey (LFS) are consistent with the International Labour Organization (ILO) definition of employment. Under this definition, employment includes both those who are in work during the reference period and those who are temporarily away from a job. The number of people who are estimated to be temporarily away from work includes furloughed workers, those on maternity or paternity leave and annual leave. Prior to the coronavirus (COVID-19) pandemic there were on average 2 to 2.5 million people temporarily away from work. Experimental estimates based on returns for individual weeks show that the number of people temporarily away from work rose to around 7.9 million people in April 2020 but has fallen to around 4.1 million people in November 2020. There were also around 278,000 people away from work because of the pandemic and receiving no pay in November 2020; this has fallen from around 658,000 in April 2020.

The Opinions and Lifestyle (OPN) Survey showed that 12% of respondents reported that they were on furlough between 18 and 22 November 2020, which is also observed in the period afterwards, between 25 and 29 November. This is a considerable increase compared with the period 28 October to 1 November, where 5% of respondents reported that they were on furlough.

The Business Impact of Coronavirus (COVID-19) Survey shows that the proportion of workforce on furlough increased through November 2020, reaching 16% in the period 16 to 29 November, but it decreased to 11% between 30 November and 13 December 2020. The decrease in the percentage of the workforce on furlough may be because of changes in COVID-19 restrictions, as the second lockdown in England ended on 2 December 2020. The decrease may also be because of seasonal changes such as Christmas-related increase in demand. The wholesale and retail trade industry was responsible for about half of the decrease in the proportion of the workforce on furlough over the period.

Unemployment

Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

For September to November 2020, an estimated 1.72 million people were unemployed, up 418,000 on the same period the previous year and up 202,000 on the quarter.

For people aged 16 years and over, for September to November 2020:

  • the estimated UK unemployment rate for all people was 5.0%; this is 1.2 percentage points higher than a year earlier and 0.6 percentage points higher than the previous quarter

  • the estimated UK unemployment rate for men was 5.4%; this is 1.3 percentage points higher than a year earlier and 0.5 percentage points higher than the previous quarter

  • the estimated UK unemployment rate for women was 4.7%; this is 1.1 percentage points higher than a year earlier and a record 0.7 percentage points higher than the previous quarter

The single-month and weekly estimates of the unemployment rate suggest that the rate has increased through September and October 2020, but was fairly flat in November 2020.

Economic inactivity

Economic inactivity measures people without a job but who are not classed as unemployed because they have not been actively seeking work within the last four weeks and/or they are unable to start work within the next two weeks. Our headline measure of economic inactivity is for those aged between 16 and 64 years.

Estimates for September to November 2020 show 8.59 million people aged between 16 and 64 years not in the labour force (economically inactive). This was 87,000 more than a year earlier but 33,000 less than the previous quarter.

For people aged between 16 and 64 years, for September to November 2020:

  • the estimated economic inactivity rate for all people was 20.7%; this is up by 0.2 percentage points on the same period the previous year but down by 0.1 percentage points on the quarter

  • the estimated economic inactivity rate for men was 17.0%; this is up by 0.9 percentage points on the same period the previous year and up by 0.3 percentage points on the quarter

  • the estimated economic inactivity rate for women was at a joint record low of 24.4%; this is down by 0.5 percentage points on the same period the previous year and also down by 0.5 percentage points on the quarter

The Bank of England Monetary Policy Report  (MPR) for November 2020 (PDF, 5.16MB) indicated a flow of workers from inactivity to unemployment as workers who were made redundant over the summer began searching for jobs. This increased the unemployment rate in the autumn. The effect was captured by the "marginal attachment ratio" (which shows the amount of people who are unemployed and did not seek work but would like a job) of which the latest figures show a sharp fall following a peak in June.

More about economy, business and jobs

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4. Hours worked

Between June to August 2020 and September to November 2020, total actual weekly hours worked in the UK saw an increase of 89.0 million, or 10.0%, to 979.9 million hours.

Average actual weekly hours worked saw an increase of 2.8 hours on the quarter to 30.1 hours.

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5. Redundancies

The redundancy estimates measure the number of people who were made redundant or who took voluntary redundancy in the three months before the Labour Force Survey interviews; it does not take into consideration planned redundancies. So, in this release, the latest estimates may relate to redundancies over the period from the beginning of July to the end of November 2020.

The number of people reporting redundancy in the three months prior to interview increased in September to November 2020 by a record 280,000 on the year, and 168,000 on the quarter, to a record high of 395,000.

Experimental weekly Labour Force Survey (LFS) estimates show that the number of people reporting redundancy in the three months prior to interview has been increasing since June 2020 and remains high in November 2020 but has dropped from the peak in September.

According to the  Business Impact of Coronavirus (COVID-19) Survey (BICS)Wave 19, during the reference period 16 to 29 November 2020, businesses expected that 5% of their workforce would be made redundant in the three months following the interview. The rate of expected redundancies was highest in administrative services (14%), accommodation and food service activities (10%), and transportation and storage (8%). The overall proportion was similar in BICS Wave 18, at 6%.

The Bank of England (BoE) Agents' summary of business conditions covering intelligence gathered between mid-November and early December 2020 shows that employment intentions improved slightly, reflecting reports from many contacts that they had largely completed headcount adjustments. However, the outlook remains negative, and further job cuts are expected in retail, hospitality and leisure, and construction once the government's Job Retention Scheme unwinds. Nonetheless, there were reports of companies increasing staff numbers in sectors such as pharmaceuticals, IT and professional services.

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6. Pay As You Earn Real Time Information

Experimental data on the number of payroll employees and median earnings, using HM Revenue and Customs's (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI), also show current labour market conditions.

Early estimates for December 2020 indicate that there were 28.2 million payrolled employees, a fall of 2.7% compared with the same period of the previous year and a decline of 793,000 people over the 12-month period. Compared with the previous month, the number of payrolled employees increased by 0.2% in December 2020 – equivalent to 52,000 people.

Early estimates for December 2020 indicate that median monthly pay increased to £1,930, an increase of 4.9% compared with the same period of the previous year.

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7. Claimant Count (Experimental Statistics)

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These Claimant Count statistics relate to 10 December 2020. Enhancements to Universal Credit as part of the UK government's response to the coronavirus mean that an increasing number of people became eligible for unemployment-related benefit support, although still employed.

Consequently, changes in the Claimant Count will not be wholly because of changes in the number of people who are unemployed. We are not able to identify to what extent people who are employed or unemployed have affected the numbers.

More detail on the Claimant Count can be found in the Employment in the UK bulletin.

The Claimant Count increased slightly in December 2020 to 2.6 million (Figure 5). This represents a monthly increase of 0.3% and an increase of 113.2%, or 1.4 million, since March 2020.

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8. Vacancies

In October to December 2020, there were an estimated 578,000 vacancies, which is a quarterly increase of 81,000 vacancies. This was the smallest quarterly increase since July to September 2020. 

While the experimental single-month estimates should not be considered accurate estimates of vacancies in the reported months, they do indicate estimated vacancies at the end of 2020 were impacted by second national lockdowns and further restrictions, with a fall of around 10% from October to December.

The Bank of England Agents' summary of business conditions for October to December 2020 reported an increase in the quality and quantity of applications from unskilled and junior staff. Conversely, there were shortages of highly skilled and experienced professionals in fields such as healthcare and social care, IT, engineering and finance. The report argued that this possibly reflects a skills gap between sectors that experienced job shedding and those who intended to recruit more workers. Further, the report indicated an increase in EU nationals returning home, which may decrease the availability of candidates.

The KPMG and REC, UK Report on Jobs published in January 2021 (PDF, 683KB) reported an increase in overall vacancies at the beginning of December 2020, following a drop in overall vacancies that was mainly driven by a substantial fall in permanent jobs in the period October to November 2020. Temporary billings increased at the quickest pace since October 2018, whereas demand for permanent staff increased only marginally. Recruiters suggested that the upturn in temporary billings was linked to underlying business uncertainty around the coronavirus (COVID-19) pandemic.

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9. Earnings growth

In September to November 2020, the rate of annual pay growth was positive 3.6% for total pay and positive 3.6% for regular pay.

The rate of total and regular pay growth had stood at 2.9% in December 2019 to February 2020 immediately prior to any impact from the coronavirus (COVID-19) pandemic was seen; it then slowed sharply in April to June 2020 to negative 1.3% for total pay and negative 0.1% for regular pay before some increase between July and November. The lower percentage growth figure for total pay reflected many bonus payments being cancelled or postponed.

In real terms, total pay is now growing at a faster rate than inflation, at positive 2.8%, and regular pay growth in real terms is also positive, at 2.8%.

Between September to November 2019 and September to November 2020, average pay growth varied by industry sector. The finance and business services sector saw the highest estimated growth in total pay, at 5.4%. Negative growth was seen in the construction sector, estimated at negative 1.1%. The wholesaling, retailing, hotels and restaurants sector, estimated at 3.1%, and manufacturing, estimated at 0.8%, were positive. This is an improvement on the growth rates in April to June 2020, the three-month period with the biggest falls in average pay, when these sectors had falls of 5.4% and 3.4% respectively.

Current average pay growth rates are being impacted upwards by a fall in the number and proportion of lower-paid jobs compared with before the coronavirus pandemic; it is estimated that underlying wage growth -- if the effect of this change in profile of jobs is removed -- is likely to be under 2%.

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10. Coronavirus and measuring the labour market

The data presented in this bulletin are collected from various sources. Each cover different reference periods or count dates and are therefore impacted differently by the coronavirus (COVID-19) social distancing and lockdown measures.

Figure 8 shows the data reported in this bulletin (dark bars) alongside their different reference periods and count dates (white text). The main coronavirus dates are included to show how much of the data presented were impacted by the implementation of coronavirus social distancing and lockdown measures.

Coronavirus and Labour Force Survey estimates

Because of the coronavirus and the suspension of face-to-face interviewing on 17 March 2020, we had to make operational changes to the Labour Force Survey (LFS), particularly in the way that we contact households for initial interview, which moved to a "by telephone" approach. These changes resulted in a response where certain characteristics have not been as well represented as previously and is evidenced in a change in the balance of type of household that we are reaching. In particular, the proportion of households where people own their homes in the sample has increased and rented accommodation households has decreased.

To mitigate the impact of this non-response bias, in October 2020, we introduced housing tenure into the LFS weighting methodology for periods from January to March 2020 onwards. While not providing a perfect solution, this redressed some of the issues that had previously been noted in the survey results. More information can be found in Coronavirus and its impact on the Labour Force Survey and in this blog.

The change in weighting methodology resulted in revisions to all LFS estimates published on 13 October 2020 for the periods January to March 2020 through to May to July 2020 and consequently had an impact on recent movements for a number of the published series. More information about the impact of the change in weighting on main LFS indicators published in October 2020 can be found in Dataset X08.

LFS responses are weighted to official population estimates and projections that do not currently reflect the impact of the COVID-19 pandemic. The Labour Force Survey (LFS) is not designed to measure changes in the levels of population or long-term international migration. We are analysing the population totals used in the weighting process and may make adjustments if appropriate. Rates published from the LFS remain robust and reliable, however levels and changes in levels should be used with caution.

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11. Labour market data

Summary of labour market statistics
Dataset A01 | Released 26 January 2021
Estimates of employment, unemployment and other employment-related statistics for the UK.

Employment, unemployment and economic inactivity
Dataset A02 SA | Released 26 January 2021
Estimates of UK employment, unemployment and economic inactivity for people aged 16 years and over and people aged between 16 and 64 years based on the Labour Force Survey (LFS).

Average weekly earnings
Dataset EARN01 | Released 26 January 2021
Estimates of Great Britain earnings growth based on the Monthly Wages and Salaries Survey.

Vacancies by industry
Dataset VACS02 | Released 26 January 2021
Estimates of the number of UK job vacancies for each industry, based on a survey of businesses.

Real Time Information statistics
Dataset Real Time Information statistics | Released 26 January 2021
Earnings and employment statistics from Pay As You Earn (PAYE) Real Time Information (RTI) (Experimental Statistics) seasonally adjusted.

Claimant Count
Dataset CLA01 | Released 26 January 2021
Experimental estimates of the Claimant Count including Jobseeker's Allowance and out of work Universal Credit claimants.

Labour Force Survey weekly estimates
Dataset X07 | Released 26 January 2021
LFS weekly estimates of employment, unemployment, economic inactivity and hours in the UK. All estimates are calculated from highly experimental weekly LFS datasets.

Labour Force Survey single month estimates
Dataset X01 | Released 26 January 2021
Labour Force Survey (LFS) experimental single-month estimates of employment, unemployment and economic inactivity

View all related data on the related data page. Alternatively, Nomis provides free access to the most detailed and up-to-date UK labour market statistics from official sources.

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12. Glossary

Average weekly earnings

Average weekly earnings measures money paid by employers to employees in Great Britain before tax and other deductions from pay. The estimates are not just a measure of pay rises as they also reflect, for example, changes in the overall structure of the workforce. More high-paid jobs in the economy would have an upward effect on the earnings growth rate.

Economic inactivity

People not in the labour force (also known as economically inactive) are not in employment but do not meet the internationally accepted definition of unemployment because they have not been seeking work within the last four weeks and/or they are unable to start work in the next two weeks. The economic inactivity rate is the proportion of people aged between 16 and 64 years who are not in the labour force.

Employment

Employment measures the number of people in paid work or who had a job that they were temporarily away from (for example, because they were on holiday or off sick). This differs from the number of jobs because some people have more than one job. The employment rate is the proportion of people aged between 16 and 64 years who are in employment. A more detailed explanation is available in A guide to labour market statistics.

Unemployment

Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is not the proportion of the total population who are unemployed. It is the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

Vacancies

Vacancies are defined as positions for which employers are actively seeking recruits from outside their business or organisation. The estimates are based on the Vacancy Survey; this is a survey of businesses designed to provide estimates of the stock of vacancies across the economy, excluding agriculture, forestry and fishing (a small sector for which the collection of estimates would not be practical).

Claimant Count

The Claimant Count seeks to measure the number of people claiming benefit principally for the reason of being unemployed.

The Claimant Count has generally been a count of the appropriate benefits within the UK's current benefit regime that best meet that criteria, and therefore sensitive to any changes in the benefit regime. Currently, this is a combination of claimants of Jobseeker's Allowance (JSA) and claimants of Universal Credit (UC) who fall within the UC "searching for work" conditionality.

Those claiming unemployment-related benefits (either JSA or in the UC searching for work conditionality group) may be:

  • wholly unemployed and searching for work

  • employed but with low income and/or low hours, that make them eligible for unemployment-related benefit support

  • under certain circumstances, not required to seek work and therefore economically inactive

UC, which has been rolled out to replace the previous income-based element of JSA, along with a range of other income-based benefits, is designed to be a broader benefit, covering more people with underlying eligibility than those who claimed JSA. As a household benefit, the holistic situation of all members of the household are considered, and their obligations to look for work considered. Therefore, the roll-out itself has caused notable changes to the level of the Claimant Count, significantly closing the previously existing gap between the count and unemployment levels. Consequently, the measure is currently an Experimental Statistic, as movements are not wholly caused by changes in the labour market.

Pay As You Earn (PAYE) Real Time Information (RTI)

These data come from HM Revenue and Customs' (HMRC's) Pay As You Earn (PAYE) Real Time Information (RTI) system. They cover the whole population rather than a sample of people or companies, and they will allow for more detailed estimates of the population. The release is classed as Experimental Statistics as the methodologies used to produce the statistics are still in their development phase. As a result, the series are subject to revisions.

PAYE is the system employers and pension providers use to take Income Tax and National Insurance contributions before they pay wages or pensions to employees and pensioners. This publication relates to employees only and not pensioners.

A more detailed glossary is available.

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13. Measuring the data

The employment, unemployment and economic inactivity estimates rely on data collected from the Labour Force Survey (LFS), a survey run by field interviewers with people across the UK every month.

The LFS performance and quality monitoring reports provide data on response rates and other quality-related issues for the LFS, including breakdowns of response by LFS wave, region and question-specific response issues. The average weekly earnings and vacancies estimates rely on data collected from surveys of employers.

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the following QMI reports:

Coronavirus

For more information on how labour market data sources are affected by the coronavirus (COVID-19) pandemic, see the article published on 6 May 2020, which details some of the challenges that we have faced in producing estimates at this time.

An article published 11 December 2020 compares our labour market data sources and discusses some of the main differences.

Our latest data and analysis on the impact of the coronavirus on the UK economy and population are available on our dedicated coronavirus web page. This is the hub for all special coronavirus-related publications, drawing on all available data. In response to the developing coronavirus pandemic, we are working to ensure that we continue to publish economic statistics. For more information, please see COVID-19 and the production of statistics.

End of EU exit transition period

As the transition period ends and the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available early this year.

We will continue to produce our labour market statistics in line with the UK Statistics Authority's Code of Practice for Statistics and in accordance with International Labour Organization (ILO) definitions and agreed international statistical guidance.

Future publication dates

23 February 2021

23 March 2021

20 April 2021

18 May 2021

15 June 2021

15 July 2021

Sampling variability

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14. Strengths and limitations

Some of the figures in this bulletin come from surveys, which gather information from a sample rather than from the whole population. The sample is designed to be as accurate as possible given practical limitations such as time and cost constraints. Therefore, the estimates presented in this bulletin contain some uncertainty and are not precise figures. This can have an impact on how changes in the estimates should be interpreted, especially for short-term comparisons.

As the number of people available in the sample gets smaller, the variability of the estimates that we can make from that sample size gets larger. Estimates for small groups (for example, unemployed people aged between 16 and 17 years), which are based on small subsets of the Labour Force Survey (LFS) sample, are less reliable and tend to be more volatile than for larger aggregated groups (for example, the total number of unemployed people).

In general, changes in the numbers (and especially the rates) reported in this bulletin between three-month periods are small and are not usually greater than the level that can be explained by sampling variability. Short term movements in reported rates should be considered alongside longer-term patterns in the series and corresponding movements in other sources to give a fuller picture.

Further information is available in A guide to labour market statistics.

Where to find data about uncertainty and reliability

Dataset A11 shows sampling variabilities for estimates derived from the LFS.

Sampling variability information for average weekly earnings growth rates is available from the "Sampling Variability" worksheets within Datasets EARN01 and EARN03. The sampling variability of the three-month average vacancies level is around plus or minus 1.5% of that level. Information on revisions is available in the Labour market statistics revisions policy.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Debra Leaker
labour.market@ons.gov.uk
Ffôn: +44 (0)1633 455400