What do the February 2022 statistics tell us about the labour market?
The last couple of months have shown a stabilisation of claimant count after consecutive months of improvement. The UK’s largest cities show relatively high claimant count rates.
The last couple of months have shown a stabilisation of claimant count after consecutive months of improvement. The UK’s largest cities show relatively high claimant count rates.
Since the start of the year, the Government has been lifting pandemic-related restrictions. In January, remote working guidance was lifted and February marked the end of isolation laws and mass free testing. Did these measures have immediate impacts on employment? The latest update of Centre for Cities’ UK Unemployment Tracker shows us how much places recovered.
Here are the key findings.
As of February 2022, 1.8 million people (4.3 per cent) were claiming either Job Seekers’ Allowance or the work component of Universal Credit in the UK. The number of claimants rose by approximately 32,000 when compared with January 2022 (the lowest number since the start of Covid-19). This was the first increase in claimants in a year. Youth claimant count followed a similar pattern by rising to 4.1 per cent in February (+0.1 p.p.).
The observed increase in February (0.08 p.p.) seems to be driven by seasonal aspects. February’s claimant count rate rose marginally in the four periods before the pandemic. That said, recent months have shown signals of stabilisation after a strong recovery (Figure 1).
Source: ONS.
Claimant count figures at the national level however mask the differences between urban and non-urban areas. The aggregate claimant count of cities and large towns in the UK (5.1 per cent) is currently 1.8 percentage points higher than non-urban areas (3.3 per cent).
This gap increased with the start of the pandemic and it remained mostly stable in the last four months. This is mostly driven by the UK’s largest cities, most of which were struggling even before the pandemic. With the exception of Bristol, ten of the largest cities in the UK currently have a claimant count rate above the national average – with Birmingham having the highest rate among the 64 cities analysed – and the gap between these cities and the national average widened in the last two years. These cities are those where weekday footfall activity has not yet fully recovered.
| City | Claimant count, February 2022 (%) |
| Birmingham | 7.6 |
| Liverpool | 6.3 |
| Manchester | 5.8 |
| London | 5.3 |
| Newcastle | 5.2 |
| Leeds | 4.9 |
| Glasgow | 4.8 |
| Sheffield | 4.8 |
| Nottingham | 4.6 |
| National average | 4.3 |
| Bristol | 3.4 |
Source: ONS
February’s PAYE-based data shows that the number of employees in the UK grew by 0.9 per cent and reached its highest level since the start of the pandemic.
However, the observed improvements in the labour market have not been distributed equally across the UK’s cities (Figure 2). The number of cities with fewer employees than pre-Covid fell from 12 to six. Despite recent improvements, Crawley is the city that is furthest away from its pre-pandemic levels.
Source: Source: ONS, Earnings and employment from Pay As You Earn Real Time Information, seasonally adjusted (PAYE).
Nonetheless, the recent employment recovery did not bring the claimant count down. There are several potential reasons for this. First, the number of previously self-employed (who aren’t included in the PAYE data) who are currently claimants could partially explain the increase in claimant count.
Second, previous trends of employment and population growth suggest that returning to February 2020 levels may not be enough to bring claimant count down, if there are fewer jobs per working-age population as the population increases.
Recent improvements in terms of employees suggest that the labour market recovery from Covid-19 is mostly over in several British cities. That said, levelling up and the goal of having a globally competitive city in every area should not be about cities reaching their pre-pandemic level labour markets. In order to effectively level up the country, cities (especially in the North and Midlands) need to substantially improve their economic performance compared to previous years.
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