The UK labor market turned a corner in the first quarter of 2021, with increasing paid employment, falling unemployment and hiring ramping up as the economy approaches reopening.
The unemployment rate averaged 4.8 percent between January and March, down from 5.1 percent in the previous quarter, the Office for National Statistics said on Tuesday.
The employment rate rose 0.2 percentage points to 75.2%, but remained 1.4 percentage points below its pre-pandemic level.
Data from HM Revenue & Customs showed the number of salaried employees increased for a fifth consecutive month in April, although 772,000 remained below pre-pandemic levels as job losses were concentrated for young people. The layoff rate has also fallen from its peak reached last fall, although it is still higher than its pre-pandemic rate.
The ONS said the unemployment rate and youth employment rate fell in the last quarter, suggesting they are continuing their education without looking for work.
“The job market is stable,” said Tej Parikh, chief economist at the Institute of Directors. While more job losses are likely as the time off program rolls out, they will be offset by new hires as companies scale up their operations, he added. He also called on the government to step up its retraining initiatives to help fill skills shortages.
There are few signs of a labor shortage pushing wage growth to unsustainable levels. The ONS said the underlying annual growth in total compensation – after adjusting for the sharp decline in low-paying jobs – averaged around 2.5% between January and March 2021, while regular compensation, excluding bonuses, increased more sharply by 3%.