Download Inclusion's analysis from April 2009
Employment showed a dramatic fall in the latest figures, with a fall in the employment rate of 0.3 percentage points that was equalled only at the depths of the last two recessions. The quarterly fall of 126,000 people in employment was exceeded over the period from October-December 1990 to December-February 1992, and then in occasional figures through to December-February 1993.
Unemployment continues rising, in a more or less straight line. The more recent JSA claimant count figures show a very small slackening in the rate of rise, though the increase is still one of the largest on record.
Vacancies, on the other hand, on both measures, show a flat trend this month after very fast declines. It is too early to see this as positive as much can change in one month.
Chart 1: UK unemployment (ILO)
Unemployment was 2,100,000 in the December-February quarter. This was an increase of 9.2% on the September to November quarter. The increase was faster for men (a 9.9% rise) than for women (a 8.2% rise). There are 1.26 million men and 0.84 million women unemployed.
Chart 2: Unemployment rates by age
The unemployment rate for young people (18-24) has now reached 15.1%. This compares with unemployment rates of 5.2% of those 25-49 and of 4.0% for the over-50s. The youth unemployment rate is now at its highest since June 1995. The increase in unemployment rate has been sharpest for 18-24s, with a 3.2 percentage point rise since January 2008, with rises for 25-49s at 1.3 percentage points and for the over-50s at 1.1 percentage points. The percentage increase has been fastest for the over-50s, partly because their unemployment was very low (2.9%) in January 2008.
Chart 3: Young people unemployed, inactive and not in education
Youth unemployment is rising, but the claimant count figures do not fully reflect the rise yet. The New Deal is still taking 18-24-year olds off the claimant count into New Deal options. The number doing this has been rising sharply since September 2008 – ten months after the claimant count started rising, as New Deal rules would indicate. The last official figure we had for young people so long-term unemployed they were on New Deal Options was 17,410 in August 2008. By now, we expect that to have risen to 21,000, and by the time that young people stop being referred to New Deal options in July 2009, to around 25,000. From then, these young people will start becoming visible in claimant count figures. Now, there are 438,200 young people claiming Jobseeker’s Allowance (JSA). Adding in those on New Deal takes that to 460,000. The 500,000 mark could be passed on current trends in May, and 600,000 by September. The Budget announcement of a guarantee of work or training for those 12-month unemployed or more and under 25 will reduce these figures when implemented.
Chart 4: Jobseeker’s allowance – claimant count, new claims and leavers
New claims for JSA are shown by the ONS statistics as 363,500, an increase of 1,800 in the month, or 0.5%. This increase shows a slackening in the rise, but it would be unwise to build too much hope on one month’s figures. However, these are seasonally adjusted figures to show the trends. The unadjusted figures show that this figure is the second highest March figure on record, only beaten by March 1991. The numbers of leavers also rose, as in previous recessions. This is because there are more people to leave, although the proportion of claimants leaving each month has dropped from 26% in April 2008 and now remains under 20%.
Chart 5: Jobseeker’s allowance – claimant count
The claimant count number continues to accelerate upward, but last month’s rise was lower than February’s. The increase was 73,700, the lowest figure since November 2008. On the other hand, it is the largest rise since March 1991, with the exception of the past few months.
The gap between unemployment and the JSA claimant count remains large, but is shrinking. Overall, 61% of the unemployed claim JSA. However, only 39% of unemployed women claim JSA while 75% of unemployed men claim JSA.
Chart 6: Jobseeker’s allowance – claimants staying through each three-month threshold (seasonally adjusted)
The rates of staying on JSA have risen sharply this month for claimants who have been on JSA for all durations. The increases since January 2008 have been over 10 percentage points for the two shortest duration groups and nearly 10 percentage points for those passing through 12 months (from 9 months). Rises are lower where people can be sent off benefit to New Deal options, as in the 6-9 months staying to 9-12 months group. These rises in the rates of staying on for a further three months have been close to parallel for the duration groups, following a low point in autumn-winter 2007.
However, the rate of becoming 12-month (long-term) unemployed has risen much less sharply. This is owing to the very low rates of becoming three-month claimants in winter 2007-08, and the slow acceleration in rates of staying on past subsequent thresholds. The main impact on the risk of becoming 12-month unemployed has been the rate of becoming three-month unemployed – which had risen by 2.7 percentage points in the quarter to June 2008. It has since risen by a further 10 percentage points. The rise in the proportion staying through 12 months has only been 1.9 percentage points to date, though is expected to rise faster as the rise in staying-on rates for shorter duration groups feeds into the 12-month figure through the year.
Chart 7: Jobseeker’s allowance – proportion of starters in month becoming longer-term unemployed
A different way of looking at the long-term unemployed figures is to look at the proportion of people who claimed JSA in a particular month who are still there. For people who started claiming in the quarters to March 2008, September 2008 and December 2008, the curves showing their progress display increasing proportions remaining on benefit in each successive quarter. The red dot shows the proportion staying to three months in March 2009, at 55%.
In an equivalent phase of the last recession, in September 1990, 55% of new claimants became three-months unemployed. Nearly 21% of those new claimants became 12-month unemployed. Unless the rates of staying on through each later quarterly threshold fall, which would require new policies, there is every chance of 16-18% of these claimants becoming 12-15 month unemployed in February 2010. We expect that more active Jobcentre Plus provision, compared with 1990-91, to make some difference, though it remains to be seen how large a difference.
Chart 8: Vacancies – whole economy survey
Vacancies show a flattening in the past month in both the ONS figures and Inclusion’s analysis of Jobcentre Plus vacancies. ONS vacancies have now fallen to 454,000 in the ONS vacancy survey. The three-month average has now fallen to 462,000. There was a rise in ONS vacancies of 1,000. These are vacancies surveyed by the ONS for which employers are actively recruiting, and is intended to measure all vacancies in the economy. Therefore, the fall in the ratio of unemployed to vacancies is particularly worrying. In January 2008, vacancies were 43% of the number of unemployed (ILO unemployed). This has now fallen so that in January 2009, vacancies were 24% of the unemployed and in March, vacancies were 21% of Inclusion’s estimate ot the unemployed.
Chart 9: Vacancies and unemployment ratio
Inclusion’s analysis of Jobcentre vacancies centres on vacancies which can count as a job outcome for Jobcentre Plus and providers – jobs lasting for 16 hours or more a week. In March 2009, 27% of new Jobcentre Plus vacancies were for jobs under 16 hours a week. Inclusion has adjusted the Jobcentre Plus vacancies for seasonal factors and averaged the results over a three-month window to produce figures on a similar basis to the ONS’ survey of employers.
These estimates show a fall in Jobcentre vacancies over the year to March 2009 of 34%, compared with a fall in the ONS vacancy survey of 35% for the three-month average series.
In the month to 6 March 2009, there were 170,403 new Jobcentre Plus 16-hour plus vacancies compared with 364,254 new JSA claimants (before seasonal adjustment) and 1,461,100 total JSA claimants. This is without taking into account Employment and Support Allowance and other Incapacity Benefits claimants or lone parents on Income Support.
Chart 10: Vacancies – Jobcentre Plus new 16-hour plus vacancies
Chart 11: UK employment
The number of people employed fell by 112,000. There are falls in all categories except those on government employment programmes. The quarterly fall was 126,000, which was the largest quarterly fall since December-February 1993. There was a 16.1% quarterly rise in involuntary temporary working and of 12.1% in involuntary part-time working. These are very large rises in the numbers of people working, but not in a way they find acceptable. The rise in involuntary part-time working contributes nearly 60,000 full-time equivalent extra to Inclusion’s Slack Labour Market indicator, now at 4.8 million.
Chart 12: Employment rate in the UK
The fall in employment produced a large fall in the employment rate of 0.3 percentage points. This has been equalled on only two occasions – in August to October 1980 and in April to June 1991.
Chart 13: Claimants for inactive benefits and the economically inactive – incapacity benefits
The latest figures for the reasons for inactivity show a small monthly rise in the numbers inactive because of long-term sickness but a quarterly fall. Earlier trends showed that these figures followed similar patterns to numbers of claimants for Incapacity Benefit (now the Employment and Support Allowance). In previous recessions, people who had been long-term unemployed moved onto these benefits. However, this pattern was not immediate but occurred when people gave up hope of working. This recession has coincided with greater moves to encourage claimants back into the labour market through the introduction of the Employment and Support Allowance and Pathways to Work.
Chart 14: Claimants for inactive benefits and the economically inactive - lone parents
The latest figures for inactivity owing to looking after family and/or home, show a one-month flattening following earlier falls. Earlier figures showed a broadly parallel pattern with numbers claiming workless benefits as lone parents. It is too early to say whether the fall in inactivity is related to the increasing requirements on workless lone parents to look for work (which would classify them as unemployed). It is possible that this drop relates to other changes in family work patterns, as non-working partners seek work to replace income lost as the other partner lost their job.
Chart 15: Employment rate quarterly change in regions – Dec-Feb 2009
While employment has risen slightly, there are strong regional differences. Out of twelve regions and nations, the employment rate has risen in only two, the North West and the Eastern regions. Other regions fell, some by quite large percentages. However, these figures vary quite a lot between monthly releases, so some of the changes may be simply statistical differences between different people surveyed. The relatively better pattern for London, or at least better than much of the rest of the country, comes through from a number of independent sources so has a higher reliability. London’s employment rate is now higher than the North East, West Midlands, Wales and Northern Ireland.
Chart 16: Unemployment rate quarterly change in regions – Dec-Feb 2009
Unemployment rates are up in all regions. The biggest rises are in Northern Ireland, the West Midlands, East Midlands, Wales and South West England. London had an increase in the middle of the range this month, after a period of very low increases.
Chart 17: Inactivity rate quarterly change in regions – Dec-Feb 2009
Inactivity is down overall, but by very little, and is down in six English regions, with the exceptions being the North East and the South East. Inactivity is, on the other hand, up in Wales, Scotland and Northern Ireland. Wales and Northern Ireland have the highest inactivity rates.
