THIS week’s labour market statistics signalled the ending of the UK Government’s coronavirus job retention scheme had not brought immediate calamity, but it is early days and some of the detail suggests reasons to be wary.

The fact that the rise in employment in the July to September period was driven overwhelmingly by part-time working, the increase in which eclipsed growth in full-time roles, looks like particular cause for concern. Increasing employment in the third quarter, the end of which coincided with the conclusion of the furlough scheme on September 30, was also driven by a rise in the number of people on zero-hours contracts, notably young workers.

The figures from the Office for National Statistics show a fall in the UK unemployment rate from 4.7 per cent to 4.3% on the International Labour Organisation measure and a rise in the employment rate from 75.1% to 75.4%, comparing the July to September period with the preceding three months.

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More up-to-date experimental statistics in the form of pay as you earn (PAYE) real-time information from HM Revenue & Customs, reported by the ONS, provided some reassurance in terms of what had occurred immediately after the end of the furlough scheme.

They show the number of payrolled employees rose by 160,000 between September and October, to 29,283,571. The ONS noted the number of payrolled employees is above pre-pandemic levels. It flagged the possibility that employees who had been furloughed might still be included in the payrolled employees figure for a few more months, given their notice periods, although it also painted a positive picture of only limited redundancies.

The ONS said: “It is possible that those made redundant at the end of the furlough scheme will be included in the RTI (real-time information) data for a few further months, while they work out their notice period. However, responses to our business survey suggest that the [number] made redundant was likely to be a small share of those still on furlough at the end of September 2021.”

The Bank of England said earlier this month that “just over a million jobs are likely to have been furloughed immediately before the coronavirus job retention scheme closed at end-September, significantly more than expected in ... August”.

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It added: “Nonetheless, there have continued to be few signs of increases in redundancies and the stock of vacancies has increased further, as have indicators of recruitment difficulties.”

Asked in an interview by The Herald on October 26 about the Bank of England’s observations on the initial impact of the end of the coronavirus job retention scheme, deputy governor Sam Woods replied: “I think it is too early to say other than we can say, ‘so far, so good’. So we haven’t seen anything that should concern us at this stage.”

It is, of course, still early days. And the Bank has made it plain that what happens on the labour market front in the wake of the end of the furlough scheme will be an important factor in its deliberations on interest rates.

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Speculation about a rise in UK base rates from their record low of 0.1% at the December meeting of the Bank’s Monetary Policy Committee has been fuelled this week by official data showing annual UK consumer prices index inflation leapt to a 10-year high of 4.2% in October. The MPC’s next decision on interest rates is due to be announced on December 16.

The labour market picture painted by the headline numbers looks in some ways to be too good to be true, especially given the number of people on furlough when the scheme ended.

Mulling the forces which could be at work, the Bank of England said earlier this month: “Such high use of the scheme could reflect some companies hoarding labour ahead of an expected recovery in demand, with intelligence from the Bank’s agents suggesting that the tightening in the labour market may have increased this incentive. The uptake of furlough could also have been partially driven by factors other than labour demand, such as helping shield vulnerable workers.”

It added: “Smaller firms, which are estimated to have made up the majority of furlough use towards the end of the scheme, might also have used it to support their operation, alongside other measures such as forbearance. It is also possible that a greater number of furloughed workers were able to find second jobs with alternative employers, or had expanded the scope of existing second jobs, which was allowable under the CJRS.”

And it observed “these potential explanations could have different implications for the future path of unemployment”. Much of what is going on in the labour market remains unclear, in terms of what forces are at work and to what degrees.

There is, of course, in any case, regardless of the current buoyant headline employment figures, much awry with the UK labour market.

Skills and labour shortages in key sectors, fuelled in large part by Brexit, are causing major problems for businesses and thus holding back economic growth, as well as adding to the inflationary pressures.

And we must, of course, when contemplating the overall strength or otherwise of the labour market, never lose sight of the detail. There are plenty of stories about companies creating jobs right now but many of these posts are temporary roles to cover the festive season.

Drilling down below the headline numbers, the labour market indicators are a mixed bag. The ONS said: “The quarterly increase in employment was driven by a record high net flow from unemployment to employment. Total job-to-job moves also increased to a record high, largely driven by resignations rather than dismissals, during the July to September 2021 period. The rise is also driven by an increase in part-time work and an increase in the number of people on zero-hour contracts, driven by young people.”

Comparing the July to September period with the previous three months, there was a 168,000 or 2.6% rise in the number of employees working in part-time jobs. The number of full-time employees rose by only 63,000 or 0.3% over this period. On the self-employment front, there was a 22,000 or 1.7% rise in the number of people working part-time.

The surge in part-time working would seem to ring alarm bells, from the perspective of underemployment. For individuals struggling with the surging cost of living, and the economy as a whole, underemployment is not a good thing.

The significant part of zero-hours contracts in the rise in employment also seems worrying.

The UK and Scottish governments must do everything possible to ensure that young people’s life chances are not diminished permanently by the economic impact of the pandemic.

And it is absolutely crucial to look behind the headline numbers at the quality of the jobs in which people are employed. This is something that the UK Government’s much-vaunted “plan for jobs” seems to not really take into account, failing for example to address the needs of large numbers of experienced workers displaced by the pandemic.

Chancellor Rishi Sunak said the labour market statistics “are testament to the extraordinary success of the furlough scheme and welcome evidence that our plan for jobs has worked”.

Furlough has protected a large number of jobs. However, it is difficult to see how the data are evidence the Tories’ piecemeal and relatively inconsequential “plan for jobs” has worked.

And Mr Sunak should most definitely be wary of counting his chickens.