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LAST MODIFIED ON: 25/11/2020 - 10:51
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This chapter provides information about the labour market across the UK and in Northern Ireland in particular. It reflects the different responsibilities of the UK Government and Northern Ireland Assembly Government in employment and entrepreneurship. For further information about devolution see the article on Main Executive and Legislative Bodies in the Eurydice Network's description of education systems.
The UK is a large, open and competitive economy with low levels of regulation in its product and labour markets. The 2020 European Commission UK Country Specific Report states that the UK has high employment but low, stagnant productivity. Labour productivity and investment are low and not improving. The UK faces a broad need for more investment in equipment, infrastructure and housing, while also bringing down project costs. There is scope to improve the effectiveness of education and training systems in areas such as basic and technical skills. Tight regulation of the land market can also prevent capital and labour from moving to where it is most needed.
A certain amount of market and economic volatility has occurred following the referendum of 23 June 2016, in which the UK voted to leave the European Union. During the transition period 31 January 2020 to 31 December 2020, trading relations between the EU and the UK will remain essentially unchanged. Beyond this period, however, they will depend on the outcome of the negotiations on the UK’s future relationship with the EU.
COVID-19 has a significant economic impact on the UK. A report from the Office for National Statistics for the period of September 21st to October 4th 2020 states:
- The arts, entertainment and recreation industry had the lowest percentage of businesses currently trading, at 70%, compared with 86% across all industries.
- Wave 15 (21 September to 4 October 2020), 48% of businesses experienced a decrease in turnover; since Wave 12 (10 to 23 August 2020), the trend has flattened compared with a previously steady decrease.
- In Wave 15 (21 September to 4 October 2020), 9% of the workforce were on partial or full furlough leave, unchanged from Wave 14 (6 to 20 September 2020).
- The accommodation and food service activities industry had the highest percentage of businesses with no cash reserves, at 7%, and had the highest percentage of businesses with a severe risk of insolvency, at 17%.
Gross Value Added (GVA) is a measure of the increase in the value of the economy due to the production of goods and services. Data from 2017 published by the Office for National Statistics in 2017, shows that the UK per head GVA figure was £27,555. Of the four UK countries, only England had a higher GVA per head value than this average at £28,096. Wales had the lowest GVA per head at £19,899. Northern Ireland experienced the highest annual growth in total GVA at 3.6% though GVA per head remains the lowest at £21,172. Scotland’s GVA per head was £25,485.
Data published by the Office for National Statistics in 2020 shows labour productivity increased in 32 out of 44 enterprise regions in the UK between 2010 and 2018; the highest productivity growth was in the Coventry and Warwickshire Local Enterprise Partnership, with 16% growth over the period. Labour productivity increased in 15 out of 18 city regions between 2010 and 2018; the highest productivity growth occurred in West Midlands City Region, in Edinburgh and South East Scotland City Region and in Stirling and Clackmannanshire City Region.
The UK recognises that it has a skills shortages in some important industries, acting as an obstacle to people accessing employment. However, in Northern Ireland the gap is smaller than in other parts of the UK. The 2017 UK Employer Skills Survey showed that growth in recruitment activity was evident across most of the UK; most notably in Northern Ireland which had the largest proportional increase compared with 2015 in the number of vacancies reported (an 18% increase). Results of the 2019 survey are expected to be published in 2020.
The Northern Ireland Labour Market report published in October 2020 provides detailed information on the current labour market situation in Northern Ireland. The report states:
NI unemployment rate (16+) increased over the quarter (1.2pps) and the year (0.8pps) to 3.7% in June-August 2020. The quarterly change was statistically significant. The NI unemployment rate was below the UK rate (4.5%), the Republic of Ireland rate (5.0%) and the EU (27) rate (7.2%).
The proportion of people aged 16 to 64 in work (the employment rate) decreased over the quarter (0.3pps) and over the year (0.8pps) to 70.6%. Although recent changes were not statistically significant, the employment rate was significantly above rates in 2017. The latest employment rate recorded for the whole of the UK was 75.6%.
Additionally, NISRA (Northern Ireland Statistics and Research Agency) found that economic output decreased by 13.6% in real terms over the quarter to June 2020. Meanwhile economic output in the year to June 2020 decreased by 17.8% compared to the same period in the previous year.
UK GDP fell by 19.8% over the quarter and 21.5% over the year to Q2 2020.
Labour market regulation
The UK has a lightly regulated labour market.
In Northern Ireland, there are protections against discrimination on the grounds of age; disability; gender; race, religious and political beliefs, and sexual orientation. Further details are available from the Equality Commission for Northern Ireland.
Health and safety regulation is well established and comprehensive. Working time is controlled and flexible working promoted.
National Minimum Wage
There is a national minimum wage (NMW) and a national living wage (NLW) in the UK. The minimum national wages for under-25s are set out in the table below:
National minimum wage for:
18 to 20
21 to 24
Source: National Minimum Wage and National Living Wage rates, GOV.UK
The National Living Wage, which stipulates a higher wage for older workers, was introduced in April 2016.
The Low Pay Commission Report Spring 2016 outlines the reason for these two wages: the age structure seeks to help manage employment risks, given that younger workers have lower pay on average than older workers and face tougher labour market conditions. This means that if employers were to maintain a generally higher level of wages for all ages, there might be fewer opportunities for younger workers.
Youth and the labour market
There is no specific regulation of the youth labour market.
Persistently high youth unemployment is a long term, structural element of the UK economy.
This has been significantly impacted by COVID-19. A youth unemployment report published by the House of Commons library in October 2020 states that in June - August 2020:
- 581,000 young people aged 16-24 were unemployed, an increase of 35,000 from the previous quarter.
- 3.54 million young people were employed, down 220,000 from the previous quarter
- 2.74 million young people were economically inactive, an increase of 168,000 from the previous quarter.
In September 2020, 529,400 people aged 18-24 claimed unemployment related benefits. This was an increase of 294,400 claimants from March 2020, when the UK lockdown began. This represents an increase of 125% between March and September 2020. Some of this increase will be due to employed people who have become eligible for Universal Credit as part of the government response.
There is a policy focus across the UK on improving the support available for young people who are at risk of being not in education, employment or training (NEET). Several initiatives have been introduced by government as a response to youth unemployment increases during COVID-19, including the Kickstarter Scheme. Policy measures to address this issue are described in the article on 'Integration of Young People in the Labour Market'.
The 2015 UKCES publication entitled Catch 16-24 outlines the key issues for young people in accessing work:
- they find it difficult to get work without experience and difficult to obtain experience without work.
- access to opportunities for work placements and related activities is limited by geographical location (the so-called 'postcode lottery') - they are more readily available in areas with higher economic performance
young people are most likely to be recruited into low wage, low skilled jobs where the pathways for promotion and for further learning and development, are less clear cut.
The Office for National Statistics has developed a framework for labour market statistics which describes the major concepts (earnings, employment, hours of work, labour disputes, economic inactivity, redundancies, claimant counts, unemployment, job and vacancies) that exist within the labour market and their relationship to each other. Details are available in the Guide to Labour Market Statistics (ONS, 2016).