2020 was a profound year for the economy at a global, national and local level. 2021 is also set to be an unusual year for the recruitment market too. Rather than the expected mass redundancies, economies around the world are seeing record numbers of vacancies. What is clear is that the pandemic hasn’t had the impact on the labour market that was expected. Talk of double-digit unemployment has been wide of the mark.
The furlough fog continues to obscure the true employment / unemployment picture within Northern Ireland’s labour market statistics. Together the Job Retention Scheme (JRS) and the Self-Employment Income Support Scheme (SEISS) have provided unprecedented financial support to over 316,000 workers in Northern Ireland. That equates to 37% of total employment. At its peak, 240,200 employees were on furlough (JRS) during the lockdown period with 76,000 self-employed benefiting from assistance. Since the economy reopened, a significant proportion of these workers (as yet unspecified) have returned to work. Another sizeable cohort will remain on furlough until the scheme expires in October. Only after the scheme has ended will we get a much clearer view of the true state of the labour market. Needless to say there will be a significant rise in unemployment and fall in employment.
Last year was one of the best years ever to enter the labour market in Northern Ireland. Jobs were aplenty across a broad range of disciplines. It was arguably the case that anyone who wanted to engage in work could find an opportunity to do so. Indeed there wasn’t the supply of labour to meet employers’ demand, making it a seller’s market. Employers increased salaries to address widespread skills shortages – particularly in ICT. Even lower and unskilled jobs saw significant pay growth with big increases in the National Living Wage. Fast forward a few months and the labour market landscape is unrecognisable. 2020 will prove to be a contender for the worst year ever to enter the labour market in Northern Ireland.
Today sees the release of January data from the Ulster Bank Northern Ireland PMI. The latest report – produced for Ulster Bank by IHS Markit – saw the Northern Ireland private sector move towards stabilisation amid a reduction in near-term uncertainty. Business activity fell at a softer pace thanks to broadly unchanged new order volumes. Meanwhile, firms raised their staffing levels for the second month running and business confidence was the highest since April 2018.
Today sees the release of December data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled further reductions in output and new orders, but rates of decline softened. Meanwhile, companies increased their staffing levels for the first time in a year and confidence regarding the 12-month outlook for activity improved amid reduced uncertainty around Brexit. On the price front, the rate of input cost inflation softened again and companies lowered their output prices for the first time in over four years.
Today sees the release of November data from the Ulster Bank Northern Ireland PMI. The latest report – produced for Ulster Bank by IHS Markit – pointed to sharper declines in output and new orders at Northern Ireland companies, as Brexit uncertainty continued to weigh on activity. Employment also decreased, albeit at a relatively modest pace. Meanwhile, the rate of input cost inflation remained marked, but efforts to stimulate sales led companies to raise their selling prices at only a marginal pace.
Northern Ireland’s Labour Force Survey (LFS) churned out more record highs and lows of the positive variety in Q3 2019. However, looking through all the statistical noise there are still signs that suggest the labour market cycle has turned. A surge in self-employment has been accompanied by a reduction in the number of ‘employees’ working. Meanwhile the total number of hours worked and average hours worked has eased back from its highs earlier in the year. Given the marked deterioration in business conditions in Q3 and Q4 it is expected that this will increasingly become evident within the labour market in the coming quarters. Q2 2019 is still likely to have represented the peak in the total number of employee jobs as measured in the Quarterly Employment Survey.
Northern Ireland’s labour market continued to break records into the summer months. Unemployment fell to a new low of 2.8% and employment hit a record high of 779k jobs in Q2. That follows 14 consecutive quarters of growth. Looking at the private sector specifically shows a winning streak that is even longer, extending to five years. But can it last? There are signs that the jobs machine is slowing. The number added in the latest quarter marked a three-and-a-half year low. Meanwhile, services, the largest sector of the economy, saw its rate of growth almost grind to a halt.
Northern Ireland’s record breaking labour market has been in the spotlight for quite some time. The focus has been on unemployment hitting all-time lows and the number of jobs reaching all-time highs in Q2 2019. In terms of job numbers, Northern Ireland’s labour market is clearly in a good place, having recovered all the jobs lost in the recession and created tens of thousands of additional jobs too. But what about wages and earnings?
Northern Ireland’s labour market statistics have provided a plentiful source of positivity in recent years. Unemployment has hit lows that no economist forecasted and employment has never been higher. The latest batch of data in the Labour Force Survey (June – August 2019) reveals some more record highs (e.g. employment amongst males). However, there are a variety of indicators that suggest that the labour market is on the turn. These signs of a weakening labour market must be placed in the appropriate context; namely, Northern Ireland’s labour market has never been stronger. Indeed, Northern Ireland’s unemployment rate remains at the ridiculously low level of 2.9%, just a shade above last month’s record low of 2.8%.
