[Northern Ireland] Payroll data ‘overstating extent of labour market recovery’

Economists have said that the latest official government data may be overstating the recovery of Northern Ireland’s labour market, The Irish News reports.

The first labour market report of 2022 - published by the Northern Ireland Research and Statistics Agency (Nisra) on January 18 - revealed another rise in the number of people on company payrolls during December.

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

However, UK labour market experts 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 down the previous month’s figure by 150,000.

On Tuesday the Institute of Employment Studies (IES) 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.

The independent research centre said the figures should be taken “with a large pinch of salt” - citing the “wild revision” of monthly ‘flash estimates’ - and Ulster University economist Mark Magill echoed that sentiment.

Mr Magill said that 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, could mean little change in real terms for the local labour market in December and into the new year.

He 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,” Mr Magill 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,” he said.

“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.

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

The economist said the data points to fewer students in part-time work, with numbers remaining for longer in education also rising.

The number of new migrant workers registering for a National Insurance number has also been hit hard by both pandemic-related 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”.

Source: The Irish News

(Quotes via original reporting)

Economists have said that the latest official government data may be overstating the recovery of Northern Ireland’s labour market, The Irish News reports.

The first labour market report of 2022 - published by the Northern Ireland Research and Statistics Agency (Nisra) on January 18 - revealed another rise in the number of people on company payrolls during December.

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

However, UK labour market experts 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 down the previous month’s figure by 150,000.

On Tuesday the Institute of Employment Studies (IES) 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.

The independent research centre said the figures should be taken “with a large pinch of salt” - citing the “wild revision” of monthly ‘flash estimates’ - and Ulster University economist Mark Magill echoed that sentiment.

Mr Magill said that 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, could mean little change in real terms for the local labour market in December and into the new year.

He 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,” Mr Magill 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,” he said.

“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.

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

The economist said the data points to fewer students in part-time work, with numbers remaining for longer in education also rising.

The number of new migrant workers registering for a National Insurance number has also been hit hard by both pandemic-related 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”.

Source: The Irish News

(Quotes via original reporting)