Download Inclusion's February 2010 labour market analysis
The labour market figures published on 17 February surprised many commentators, this time in a negative direction.
It had been expected that the Jobseeker’s Allowance (JSA) claimant count would have continued to fall, but instead it showed a 23,500 rise. The rise comes from a larger than usual fall in people leaving JSA, rather than a particular change in new claims. Other indicators continued to be broadly positive, though there is a possibility of the government’s recession response directly affecting some of the figures. For example, we believe that the very sharp rise in Jobcentre Plus vacancies includes subsidised jobs financed by the Future Jobs Fund.
Chart 1: UK unemployment (ILO)
The latest unemployment figure is 2,457,000, which is a fall of 2,000 from the figure published last month. We estimate, on the basis of later claimant count figures, that unemployment may fall and then rise slightly the next month, although this remains highly uncertain.
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance
In previous recessions the proportion of the unemployed not claiming benefit has shrunk to around zero. This recession, we started with a historically high proportion of unemployed not claiming JSA. The proportion not claiming fell, as expected. In March–June the pattern changed in an unexpected way, with the proportion of the unemployed who are not claiming JSA rising. The latest data shows the proportion not claiming JSA falling to 34% (835,000).
Chart 3: Youth long-term unemployment (six months and over, 18-24)
Youth long-term unemployment rose by 1,000 from last month’s figure and is now 304,000. The claimant count measure, even if one adds in young people on New Deal options, remains far behind at 137,500.
Chart 4: Adult long-term unemployment (12 months and over, 25+)
Adult long-term unemployment on the survey measure has now risen to 472,000. The claimant count measure, including people on programmes, has risen to an estimated 231,900. The 12-month plus claimant figure is expected to continue rising until 12 months after new benefit claims were down.
Chart 5: Unemployment rates by age
The youth unemployment rate has now reached 17.6%, the same as the last published figure. The rate for those 25–49 is now 6.2% and for those 50 and over is 4.7%. The rise in unemployment rates since the recession started has been 5.4 percentage points for young people, 2.3 points for the 25–49 and 1.9 points for the over-50s.
Chart 6: Out of work young people
The number of out of work young people who are not in full-time education has risen since January 2008 by 191,000 or 15.7%. The rise has affected the unemployed and the larger number of inactive, neither in full-time education. The number of unemployed in full-time education has risen as well, but fell slightly to 266,000 in this month’s survey figures. These figures are seasonally adjusted so take into account normal holiday patterns. The rise in the number of young JSA claimants has been sharper than that in survey unemployed – now around 252,600, including those on New Deal options.
Chart 7: Jobseeker’s allowance – claimant count, new claims and leavers
The number of new claims for JSA continued to fall this month, to the lowest level since November 2008. This includes online claims. Meanwhile the number of leavers fell by 21,000. Both are seasonally adjusted, so the January fall is against the normal pattern, given jobs in post-Christmas sales. We estimate that the ‘leavers rate’ – leavers as a proportion of those who could leave, has fallen back from last month’s 18.0% to 17.1%.
Chart 8: Jobseeker’s allowance – claimant count
The JSA claimant count rose by 23,500 in January, taking the total to 1,35,600. This is a reversal of the previous falling trend.
Chart 9: Jobseeker’s allowance – claimants staying through each three-month threshold (seasonally adjusted)
There were positive changes on these measures for all groups, with the exception of the group passing through six months. The 6–9 month group had previously shown a negative trend over the past few months, which was an administrative factor associated with the startup of Flexible New Deal (in the first areas). This negative trend has been decisively reversed this month, which may relate to the availability of Future Jobs Fund jobs.
Chart 10: Jobseeker’s allowance – proportion of starters in month becoming longer-term unemployed
These figures are based on those in Chart 9, but show the patterns of the same people passing through successive quarterly thresholds.This shows a mixed picture. The flow rate through three months reached 57.4% in April 2009, very close to the December 1990 level. This group, who initially claimed in the quarter to January 2009, have now reached the 12-month mark, with 13.8% remaining, compared with 23.2% of the December 1990 group. The more recent patterns would indicate that this 13.8% figure may fall further, towards DWP’s objective of 8%.
Chart 11: Vacancies – whole economy survey
Vacancies (in the ONS survey of the whole economy) have now risen in the past three months to 479,000. As the number of vacancies is quite volatile, the ONS uses a three-month average.
Chart 12: Vacancies and unemployment ratio
Vacancies as a percentage of the unemployed has now risen slightly to 19.3%.
The ONS has now started publishing figures for unemployed people per vacancy, which we are now using, with the exception of the latest figure, which is our estimate. These show there are now 5.2 unemployed people per vacancy compared with 2.3 in March 2008.
Chart 13: Vacancies – Jobcentre Plus new 30-hour plus vacancies
Inclusion’s analysis of Jobcentre Plus vacancies shows a marked improvement in full-time vacancies. There was a seasonally adjusted rise of 18,000, taking the total to 219,000 new vacancies a month in October–December. Inclusion believes that the trend partly reflects the addition of Future Jobs Fund vacancies to Jobcentre Plus systems over the period since October 2009.
Correction: We have been advised by DWP that Future Jobs Fund vacancies may not be recorded as vacancies within the Jobcentre vacancies figures. Therefore the rise in vacancies may reflect unsubsidised growth in demand.
Chart 14: UK employment
Employment fell by 8,000, to 28,905,000. However, these changes are within the confidence intervals (which are plus or minus 107,000 for quarterly changes).
Chart 15: Employment rate in the UK
The employment rate remained at 72.4%.
Chart 16: Claimants for inactive benefits and the economically inactive – incapacity benefits
This shows claimants of Incapacity Benefit (IB), and Employment and Support Allowance (ESA) (the red dots), compared with survey figures for the economically inactive due to long-term sickness. These show a small quarterly fall in the survey measures of inactivity due to long-term sickness, but broad stability since November 2008 (within a very volatile series). We have included DWP experimental figures for the period since August 2009 for ESA/IB claimants. These show claimant numbers falling since October 2009. These figures will include in both measures lone parents who have health problems and are economically inactive and claiming ESA or IB, although there is a measure of doubt about how they respond to surveys about the reason for not looking for work.
Chart 17: Claimants for inactive benefits and the economically inactive - lone parents
This shows claimants of Income Support as lone parents, plus lone parents claiming JSA (the red squares) and survey figures for those economically inactive looking after family. Lone parents who now have to claim JSA as their youngest child is 10 years old or more (41,315 in December 2009) or other lone parent JSA claimants (10,460) are now included in the benefit measure. Lone parents claiming ESA or IB will not be included in the lone parent claimant category. Both measures are highly volatile (despite the survey measures being seasonally adjusted) but are in broad agreement around a downward trend.
Chart 18: Employment rate quarterly change in regions – October to December 2009
This quarter, the biggest fall in the employment rate has been in the East of England, and Yorkshire and the Humber. Northern Ireland, the North East and the West Midlands showed large improvements.
Chart 19: Unemployment rate quarterly change in regions – October to December 2009
Seven regions, led by Northern Ireland, the Midlands, Wales and the North East, showed improvements in the unemployment rate this quarter. The largest rises were in Scotland, and Yorkshire and the Humber.
Chart 20: Inactivity rate quarterly change in regions – October to December 2009
While there was overall a small rise in the inactivity rate, the East of England and the East Midlands have seen large rises in the inactivity rate. This is a potential concern, particularly if, and we do not yet know whether this is the case, the rise in inactivity is not simply students.The North East and Northern Ireland show large quarterly falls in economic inactivity.
