Payroll data 'overstating extent of NI labour market recovery' - economists

The latest labour market data points to fewer student in the workplace during studies.
The latest labour market data points to fewer student in the workplace during studies.

THE latest official government data may be overstating the recovery of the north’s labour market, economists have said.

The first labour market report of 2022, published by the Northern Ireland Research and Statistics Agency (Nisra) on Tuesday, revealed another rise in number of people on company payrolls during December.

A ‘flash’ estimate of HMRC PAYE data showed a record 773,400 in ‘payrolled’ jobs during December, up 0.6 per cent over the month and up five per cent over the year.

But labour market experts in Britain have already expressed scepticism over the UK-wide figure following major revisions of the HMRC data.

The December ‘flash estimate’ for the UK PAYE total has revised the previous month’s figure down by 150,000.

The Institute of Employment Studies (IES) yesterday urged both the UK Government and the ONS to stop using the PAYE data as the lead indicator for the state of the labour market.

Citing the “wild revision” of monthly ‘flash estimates’, the independent research centre said the figures should be taken “with a large pinch of salt”.

Ulster University economist Mark Magill echoed that sentiment.

He said while the revised PAYE data has not been broken down at a Northern Ireland level, the UK-wide trend, which has seen it revised down by around 0.5 per cent, it could mean little change in real terms for the local labour market in December and into the new year.

The economist also said the significant numbers of self-employed people moving into payroll jobs during the pandemic mean many workers are simply being reclassified rather than new jobs being created.

“A person might well be doing what seems like exactly the same job, but is now being classified as an employee rather than self-employed,” he said.

“It’s one reason the payroll statistics tend to overstate the extent to which we have recovered.”

The January labour market report showed 25,000 fewer people in employment in Northern Ireland compared with the end of 2019, with economic inactivity levels on the rise.

“A fall in the size of the labour force of 25,000 is roughly the equivalent of the education sector providing no output into the labour market for a full year,” said Mr Magill.

“That’s the magnitude we’re at. It’s a serious impact.”

A breakdown of the decline shows 28,000 fewer 16-24 year-olds in employment at the end of 2021 compared to the end of 2019, a fall of 25 per cent.

By contrast, the number of over 50s in employment actually rose by 12,000 (four per cent) over the same period.

Mr Magill said the data points to fewer students in part-time work, with numbers staying in education longer also on the rise.

The number of new migrant workers registering for a National Insurance number has also been decimated by the pandemic-linked restrictions on travel and Brexit.

In its assessment of the UK-wide data, the IES described the state of the labour market as “very disappointing overall – with employment growth appearing to have stalled, and falling unemployment offset by further rises in economic inactivity”.