[UK] ‘National sickie day’ and the economic impact of ill-health

The release of the Office for National Statistics’ (ONS) latest labour market health check has coincided with ‘national sickie day’ in the UK. The first Monday of February is statistically the most popular day for employees to call in sick, The Guardian reports.

The figures have revealed inactivity due to long-term sickness to be a more significant issue than previously believed.

The latest ONS figures show that there are now 2.8 million people classified as not looking for work because of health issues. An increase from the 2.6 million previously estimated and a one-third increase on the 2.1 million prior to the pandemic.

The ONS has reportedly reassesed its view of what has been happening to employment, unemployment and inactivity to take account of the fact that the size of the UK’s population has been upwardly revised. It has tentatively concluded that the labour market is bigger, sicker and tighter than older data suggested.

The government body cautioned against reading too much into its new estimates. These show that employment figures at 170,000 higher than previously thought but reveal more prime age (16- to 64-year-old) individuals not working or looking for jobs and long-term sickness now accounting for more than 30 per cent of inactivity.

Hannah Slaughter - a senior economist at the Resolution Foundation - told The Guardian, “Tackling rising ill-health is a huge social and economic challenges that we’ll be facing throughout the 2020s, as will getting the UK employment back up to and beyond pre-pandemic levels.”

The ONS view of recent short-term developments has altered. It now reportedly believes unemployment was 3.9 per cent in the three months ending in November 2023, lower than its previous estimate of 4.2 per cent.

The Bank of England is closely monitoring the labour market for signs of pay pressure easing. Analysts told The Guardian that the new ONS estimates could make the monetary policy committee more cautious about cutting interest rates.

“The new figures show that the labour market is tighter than believed previously. Furthermore, there is no evidence that conditions have loosened recently,” Philip Shaw from Investec said.

James Moberly of Goldman Sachs said, “The reduction in the unemployment rate suggests that progress on labour market rebalancing may have stalled, which has somewhat hawkish implications for the Bank.”

The ONS warned against reading too much into the new data because it lacks a complete picture of the labour market after suspending statistics from the Labour Force Survey (LFS) - formerly its main gauge of developments - on the basis that weak response rates made the results unreliable.

The LFS was reportedly replaced by an experimental series based on a range of sources including the claimant count and PAYE data. The ONS will not be ready to announce its replacement for the LFS until September.

Samuel Tombs - chief UK economist at Pantheon Macro - said the ONS still had “little faith” in the quality of its figures and was only willing to say that the unemployment rate “may have fallen”. He told The Guardian that more recent evidence, including rising redundancy notifications, showed rising unemployment.

Source: The Guardian

(Links and quotes via original reporting)

The release of the Office for National Statistics’ (ONS) latest labour market health check has coincided with ‘national sickie day’ in the UK. The first Monday of February is statistically the most popular day for employees to call in sick, The Guardian reports.

The figures have revealed inactivity due to long-term sickness to be a more significant issue than previously believed.

The latest ONS figures show that there are now 2.8 million people classified as not looking for work because of health issues. An increase from the 2.6 million previously estimated and a one-third increase on the 2.1 million prior to the pandemic.

The ONS has reportedly reassesed its view of what has been happening to employment, unemployment and inactivity to take account of the fact that the size of the UK’s population has been upwardly revised. It has tentatively concluded that the labour market is bigger, sicker and tighter than older data suggested.

The government body cautioned against reading too much into its new estimates. These show that employment figures at 170,000 higher than previously thought but reveal more prime age (16- to 64-year-old) individuals not working or looking for jobs and long-term sickness now accounting for more than 30 per cent of inactivity.

Hannah Slaughter - a senior economist at the Resolution Foundation - told The Guardian, “Tackling rising ill-health is a huge social and economic challenges that we’ll be facing throughout the 2020s, as will getting the UK employment back up to and beyond pre-pandemic levels.”

The ONS view of recent short-term developments has altered. It now reportedly believes unemployment was 3.9 per cent in the three months ending in November 2023, lower than its previous estimate of 4.2 per cent.

The Bank of England is closely monitoring the labour market for signs of pay pressure easing. Analysts told The Guardian that the new ONS estimates could make the monetary policy committee more cautious about cutting interest rates.

“The new figures show that the labour market is tighter than believed previously. Furthermore, there is no evidence that conditions have loosened recently,” Philip Shaw from Investec said.

James Moberly of Goldman Sachs said, “The reduction in the unemployment rate suggests that progress on labour market rebalancing may have stalled, which has somewhat hawkish implications for the Bank.”

The ONS warned against reading too much into the new data because it lacks a complete picture of the labour market after suspending statistics from the Labour Force Survey (LFS) - formerly its main gauge of developments - on the basis that weak response rates made the results unreliable.

The LFS was reportedly replaced by an experimental series based on a range of sources including the claimant count and PAYE data. The ONS will not be ready to announce its replacement for the LFS until September.

Samuel Tombs - chief UK economist at Pantheon Macro - said the ONS still had “little faith” in the quality of its figures and was only willing to say that the unemployment rate “may have fallen”. He told The Guardian that more recent evidence, including rising redundancy notifications, showed rising unemployment.

Source: The Guardian

(Links and quotes via original reporting)