Positive signs from labour market, challenges remain
Headline labour market indicators continue to outperform our expectations, with the recoveries in employment growth and participation ahead of schedule. The labour market will end 2020 in a stronger position than previously forecast.
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Part-timers give scope for hours adjustments; Greater part-time employment also means that firms have more internal capacity to draw on to meet an increase in demand. For most firms, increasing existing workers’ hours is preferable to incurring the search and hiring costs that come with bringing in new employees
Cut to hours largely seen as temporary; Alongside the rise in part-time employment, the underemployment rate increased sharply through the pandemic and remains over 10%. Underemployed workers are split into two groups: those that would like more hours and those that have had their usual hours cut for ‘economic reasons’.
FT average hours worked yet to recover; Commensurate with the improvement in part-time employment, hours worked by part-time employees have returned to pre-COVID levels, resulting in a recovery in average hours worked. By contrast, after recovering initially, average hours worked by full-time employees has plateaued well below pre-COVD levels.