[UK] Businesses shed close to 200,000 employees in 2024

UK tax data has revealed that the nation’s businesses have shed almost 200,000 jobs this year, indicating the precarious condition of the labour market, BNN Bloomberg reports.

HMRC data, released on December 17, revealed that the number of employees in the private sector has fallen by 1 per cent to just above 21 million since the end of 2023. The total is calculated by removing categories dominated by public-sector jobs, including health, education and the civil service, which have held up better in 2024.

HMRC’s findings reportedly contrast with workforce figures published by the Office for National Statistics that suggest the jobs market has marginally tightened. However, BNN Bloomberg says economists are closely watching alternative gauges such as vacancies and payroll tax figures after the official Labour Force Survey was impacted by a drop in response rates. 

Job ads also point to the labour market’s unravelling. Private firms posted just over half a million jobs in the three months to November, a 12 per cent decline this year, ONS figures published December 17 stated.

The Bank of England has only reduced interest rates twice this year, reportedly fearing that a resilient jobs market is keeping wage pressures too high. Those fears were partially confirmed when the latest pay figures showed wage growth accelerating for the first time in over a year. One of the biggest falls in employment in the tax data was seen in hospitality, which is being monitored closely for price pressures in the services sector.

James Smith - developed market economist at ING - told BNN Bloomberg that the payroll tax data is “one of the reasons we expect a more aggressive rate cutting cycle in 2025 than markets expect.”

“So far the fall isn’t massive and there’s little sign in other data that this is because layoffs are spiking. But it’s another sign that the jobs market has continued to cool over the past year,” she said. 

The figures echo recent surveys indicating businesses are laying off workers they had held on to in recent years and hopes that economic conditions will improve. Employers are expecting a steep increase in payroll taxes in April, together with the third large increase in the minimum wage in as many years.

Separate figures from Barclays - citing LinkedIn data - reportedly suggest that employment growth has stagnated over the last two years after falling in 2022. 

“Our alternative employment growth indicator adds to the evidence base that employment growth has been weaker for longer than the official LFS data would suggest,” Jack Meaning and Abbas Khan - Barclays UK economists - wrote in a report. “The labor market has been loosening, and will continue to loosen in coming months.” 

Overall employment levels are being buoyed by the public sector. Categories including education, health and public administration posted a 2 per cent increase in payroll numbers since January and figures from job-search website Indeed also showed education and health-related jobs have held up better than private business postings.

However, the UK government has already announced plans to cut over 10,000 civil service jobs to free up funds for spending on priorities such as economic growth, meaning the sector cannot be relied on in the longer term.

“Constrained public finances will likely weigh on public sector hiring demand with the focus more on efficiency,” Jack Kennedy - senior economist at Indeed - said. “That could be a downside risk to the labor market that the BOE will need to consider.”

Source: BNN Bloomberg

(Quotes via original reporting)

UK tax data has revealed that the nation’s businesses have shed almost 200,000 jobs this year, indicating the precarious condition of the labour market, BNN Bloomberg reports.

HMRC data, released on December 17, revealed that the number of employees in the private sector has fallen by 1 per cent to just above 21 million since the end of 2023. The total is calculated by removing categories dominated by public-sector jobs, including health, education and the civil service, which have held up better in 2024.

HMRC’s findings reportedly contrast with workforce figures published by the Office for National Statistics that suggest the jobs market has marginally tightened. However, BNN Bloomberg says economists are closely watching alternative gauges such as vacancies and payroll tax figures after the official Labour Force Survey was impacted by a drop in response rates. 

Job ads also point to the labour market’s unravelling. Private firms posted just over half a million jobs in the three months to November, a 12 per cent decline this year, ONS figures published December 17 stated.

The Bank of England has only reduced interest rates twice this year, reportedly fearing that a resilient jobs market is keeping wage pressures too high. Those fears were partially confirmed when the latest pay figures showed wage growth accelerating for the first time in over a year. One of the biggest falls in employment in the tax data was seen in hospitality, which is being monitored closely for price pressures in the services sector.

James Smith - developed market economist at ING - told BNN Bloomberg that the payroll tax data is “one of the reasons we expect a more aggressive rate cutting cycle in 2025 than markets expect.”

“So far the fall isn’t massive and there’s little sign in other data that this is because layoffs are spiking. But it’s another sign that the jobs market has continued to cool over the past year,” she said. 

The figures echo recent surveys indicating businesses are laying off workers they had held on to in recent years and hopes that economic conditions will improve. Employers are expecting a steep increase in payroll taxes in April, together with the third large increase in the minimum wage in as many years.

Separate figures from Barclays - citing LinkedIn data - reportedly suggest that employment growth has stagnated over the last two years after falling in 2022. 

“Our alternative employment growth indicator adds to the evidence base that employment growth has been weaker for longer than the official LFS data would suggest,” Jack Meaning and Abbas Khan - Barclays UK economists - wrote in a report. “The labor market has been loosening, and will continue to loosen in coming months.” 

Overall employment levels are being buoyed by the public sector. Categories including education, health and public administration posted a 2 per cent increase in payroll numbers since January and figures from job-search website Indeed also showed education and health-related jobs have held up better than private business postings.

However, the UK government has already announced plans to cut over 10,000 civil service jobs to free up funds for spending on priorities such as economic growth, meaning the sector cannot be relied on in the longer term.

“Constrained public finances will likely weigh on public sector hiring demand with the focus more on efficiency,” Jack Kennedy - senior economist at Indeed - said. “That could be a downside risk to the labor market that the BOE will need to consider.”

Source: BNN Bloomberg

(Quotes via original reporting)