Total labour force

As per the ONS data, payrolled employment in the United Kingdom in December 2021 stood at 29.5 million employees, up 184,000 on the revised November 2021 level and up 409,000 on the pre-COVID-19 (coronavirus) level in February 2020, the last month of "normal" trading conditions pre-pandemic. Meanwhile, the UK employment rate for the period September 2021 to November 2021 was estimated at 75.5%, an increase of 0.2 percentage points (pps) on the quarter, albeit 1.1 pps lower than before the pandemic (i.e., December 2019 to February 2020). The unemployment rate in September 2021 to November 2021 was 4.1%, down 0.4 pps quarter-on-quarter but conversely 0.1 pps higher when compared to the aforementioned pre-pandemic quarterly period. The economic inactivity rate for all UK people aged between 16 and 64 inclusive in September 2021 to November 2021 was 21.3%, up 0.2 pps and 0.1 pps compared the previous quarter and the three-month pre-pandemic period respectively while, in respect to the redundancy rate, it stood at 2.8 people per thousand employees in September 2021 to November 2021, down 0.8 people per thousand and 1.1 people per thousand respectively. Job vacancies - positions for which employers are actively seeking recruits from outside their business or organisation - meanwhile, amounted to in excess of 1.2 million in the United Kingdom in October 2021 to December 2021, a quarterly increase of 128,000 and a 462,000-increase compared to January 2020 to March 2020.

Over the five-year period through 2025-26, the UK labour force is forecast to grow at a compound annual rate of 0.9%, totalling circa 35,554.5 thousand people on average in the final year of the period, and, as a general rule of thumb, followed the same trajectory as underlying UK population growth under "normal" market conditions. However, as per the ONS' Labour market overview, UK bulletin – a monthly publication of estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK market – the coronavirus pandemic resulted in demographic changes and labour market volatility. In turn, factors recognised by the ONS as contributing to uncharacteristic changes in the composition of the UK labour force since amid the pandemic include: the introduction of intermittent lockdown measures and a rise in the number of people looking after relatives, resulting in the proportion of people temporarily away from paid work increasing; increased student enrolment numbers; and an increase in the number of discouraged workers not looking for work because they believed no jobs were available. Other generic reasons noted by the ONS for being economically inactive include those who: are waiting for the results of a job application; have not yet started looking for work; do not need or want employment; have given an uncategorised reason for being economically inactive; or have not given a reason for being economically inactive. As per ONS data, the average number of economically active people in 2020-21 decreased by 0.6%, the first year-on-year decline since 1994-95 (-0.2%).

The past five-year period has been characterised by economic, social and demographic changes in the United Kingdom, which have had a marked impact on the labour force; despite labour force participation seemingly growing at a steady rate pre-pandemic, reflecting sustained population growth, any exponential growth was restricted. For instance, the UK electorate voted to withdraw from the EU bloc in June 2016 - the United Kingdom officially left the European Union on 31 January 2020 and the EU-UK Trade and Cooperation Agreement was ratified on 1 January 2021, subsequent to a transition period - and, due to the then-prospect of more stringent immigration policy and prolonged Brexit-related uncertainty, EU net migration to the United Kingdom declined. Following peak levels of over 200,000 in 2015 and early-2016, the ONS reported EU net migration subsequently declined and stood at 64,000 in the year ending September 2019, largely reflecting a decrease in the number of EU migrants arriving in the United Kingdom with the intention of staying for 12 months or more for work-related reasons, in addition to a rise in EU emigration as EU nationals temporarily based in the United Kingdom returned to their home nation. Accordingly, a decline in net migration limited labour force participation.

More recently, the economic and demographic consequences of the coronavirus pandemic have diluted any would-be significant growth in the UK's labour force participation, causing it to plateau and eventually decline in 2020-21 overall. Considering the total labour forces includes those both employed and unemployed, there has been nor will be no short-term impact on total labour force numbers from an increase in redundancies or an increase in furloughed staff; however, certain demographics' propensity to participate, assessed against the tightness of the labour market and recruitment activity, have indicatively counterbalanced would-be acceleration in the labour force as the UK population continues to swell. Meanwhile, global travel bans, administered in the United Kingdom by the Foreign & Commonwealth Office (FCO), have naturally stunted the rate of net migration to the United Kingdom, preventing labour force participation from those abroad who would otherwise, under normal circumstances, be seeking work in the UK market. In 2020-21, there was a 221,100-person year-on-year contraction in the total labour force in absolute terms, representing the first contraction in the size of the labour force on average in a given fiscal year since prior to the turn of the millennium. In 2021-22, a further 0.3%, 94,700-person contraction in the number of economically active people in the UK market occurred. A contraction in the UK's total labour force occurred despite the reopening of the economy and an ever-increasing population encouraging participation ceteris paribus. A combination of: a trended decline in net migration; the aforesaid pandemic-related influence on the labour market spilling over into and through the 2021-22 fiscal year; and falling real wages, as inflation rises to record highs and outpaces the rate of pay increases, are prevented a recovery in total labour force participation

Over the course of 2022-23, the total labour force is forecast to contract by a further 0.2%, to reach 33,797.4 thousand people. This fall is a product of an array of macroeconomic headwinds the UK will be faced with over the current year. These include rising inflation partially caused by the Ukraine-Russia fuelled energy and supply chain crisis which is set to exceed wage growth. Furthermore, in response to rising inflation, the Bank of England (BoE) have raised the official bank rate to 0.5%, 0.75% and 1% respectively in February 2022, March 2022 and May 2022. In turn consumer and business confidence is expected to be subdued over the current year, while the BoE have stated that CPI inflation could reach 10% in 2022 with the UK economy likely to enter a recession at the end of the year. Hence, a further combination of: a trended decline in net migration; the aforementioned falling real wages are prevented a recovery in total labour force participation for at least the short term.