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Our labour market analysis

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January 2012

Inclusion Comment

The labour market figures published on 18 January 2012 were mixed.

The headline quarterly rise of 118,000 in ILO unemployment is the worst feature. The Jobseeker's Allowance (JSA) claimant count rose by only 1,200 - and last month's rise was revised down to just 200. This means that the number of unemployed people that did not claim JSA rose.

The most positive sign is an increase in Jobcentre Plus vacancies. This was larger than the increase in overall vacancies recorded by the ONS survey.

New claims for JSA rose, but so did leavers, so the 'leavers rate' improved.

JSA flows into long-term unemployment continued to rise. The proportion reaching 12 months has now risen to 14.6%. This figure is well above the recession peak. The previous time the proportion was at this level was in the early 1990s. The overall pattern is very poor, but the latest figures show some improvement across all durations. If this continues, the flow into long-term unemployment will reduce.

Youth unemployment is now well over the one million mark, and continues to worsen. There has been a particularly sharp rise in the numbers of unemployed young people who are in full-time education. The numbers of young people who are inactive and not in education has risen by 11,000, leading to a 10,000 rise in the number of young people who are workless and not in full-time education.

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Key Facts

Unemployment is 2,685,000, up 47,000 from last month's published figure, and the unemployment rate is 8.4%, up 0.1 percentage points on last month.
The number of claimant unemployed is 1,597,000, up 1,200 and the claimant rate is 5.0%.
Youth unemployment (not including students) is 729,000, up 8,000 in the quarter, 10 % of the youth population (up 0.1 percentage points in the quarter).
Youth unemployment (including students) is 1,042,000, up 52,000 on the quarter.
There are 5.8 unemployed people per vacancy. Inclusion estimates it will stay at 5.8 next month.
Employment was up 18,000 in the quarter to 29.1 million. Employment is up 12,000 on last month’s published figure.
The employment rate is 70.3% (the same as last month's published figure and down 0.1% in the preferred quarterly measure).

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The latest unemployment figure is 2,685,000, which is a rise of 47,000 from last month’s published figure. Inclusion estimates, on the basis of later claimant count figures, that the unemployment rise may slow next month, although this remains highly uncertain. The unemployment rate rose 0.1 percentage points, to 8.4%.

In previous recessions the proportion of unemployed people not claiming benefit has shrunk to around zero. This recession, we started with a historically high proportion of unemployed people not claiming JSA. The latest data show the proportion not claiming JSA is roughly stable at 41% (1,094,000).

Youth long-term unemployment (which can include students) fell by 12,000 from last month’s figure and is now 372,000. The claimant count measure, even if one adds in any remaining young people on programmes that have finished, remains far behind at 152,600, and is rising.

Adult long-term unemployment on the survey measure is now 610,000. The claimant count measure, including people on programmes, is rising at 259,400.

The 18 to 24 year old youth unemployment rate (including students) rose to 20.1% of the economically active, excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is now 6.6%, and for those aged 50 and over it is 5.0%. The quarterly change is up 59,000 for 18 to 24 year olds, up 53,000 for 25 to 49 year olds, and up 51,000 for the over-50s.

The number of out of work young people who are not in full-time education has risen by 7,000, or 0.5%. The number of young people (including students) who are unemployed has risen by 52,000. The number of out of work young people not in full-time education (1.448 million) rose by 10,000. The fall is entirely accounted for by a rise in inactivity rather than unemployment.

The number of new claims for JSA rose this month, by 5,000. Meanwhile, the number of leavers also rose to 308,000.

<i>Inclusion</i> estimates that the ‘leavers rate’ – leavers as a proportion of those who could leave the claimant count – has risen, but remains at a historically low level of 16.2% in December 2011. This is slowly recovering from a sharp dip from January to July 2011.

The JSA claimant count rose by 1,200 in December, taking the total to 1,597,600. The rise is slightly higher than last month’s (revised) rise. In November, the number of lone parents claiming JSA fell by 1,210.

These measures show an improvement, but overall are still a poor indication of the number of long-term unemployed people. Flow rates for shorter term claimants (under six months) remain poor by historical standards. The trend for those staying through nine months looks particularly bad, but much of this is the result of Work Programme participants remaining on JSA rather than on a training allowance.

These figures are based on those in Chart 10, but show the patterns of the same people passing through successive quarterly thresholds. There has been a slight deterioration for the shorter term groups, and earlier deteriorations are still working through to 12 and 15 month numbers. The proportion reaching 12 months has now risen to 14.6%, over the 13.7% experienced as the recession was in its downward phase. The previous time this level was reached was April 1997.

Vacancies (in the ONS survey of the whole economy) were up this month at 463,000. As the number of vacancies is quite volatile, and frequently revised, the ONS uses a three-month average.

The ONS figures for unemployed people per vacancy show there are 5.8 unemployed people per vacancy compared with 2.3 in March 2008. Inclusion estimates this may stay at 5.8 in next month’s figures. Vacancies as a percentage of the unemployed has now fallen to 17.2%.

<i>Inclusion’s</i> analysis of Jobcentre Plus vacancies shows a 9,000 rise in full-time vacancies. There was a seasonally adjusted total of 271,000 new vacancies a month in October-December. However, this rise leaves new full-time vacancies below the number of new JSA claimants. New full-time vacancies were 88% of the number of new JSA claims.

Employment rose by 12,000 on the figure published last month to 29,119,000. The headline quarterly rise was 18,000.

The employment rate fell 0.1 percentage points on the quarter to 70.3%.

This shows claimants of Incapacity Benefit, and Employment and Support Allowance (the red dots), compared with survey figures for the economically inactive owing to long-term sickness. Inactivity owing to long-term sickness has now returned to levels found in 2009, after a 2010 rise that was not reflected in the benefit figures. There are no new benefit figures this month, as the ESA/IB estimates need further work as IB reassessment is now proceeding.

This shows claimants of Income Support as lone parents, plus lone parents claiming Jobseeker’s Allowance (the red squares) and survey figures for those economically inactive looking after family. Lone parents who now have to claim Jobseeker’s Allowance because their youngest child is seven or more (113,055 in November 2011) and other lone parent Jobseeker’s Allowance claimants (8,395) are included in the benefit measure.

This quarter, four regions showed a rise in the employment rate. These were Wales, Northern Ireland, the South West and London. The employment rate fell in seven regions, with particularly large falls in the East and West Midlands, and Yorkshire and the Humber.

Four regions, led by Northern Ireland, showed an improvement in the unemployment rate this quarter. The largest rises were in the North East, Scotland and the North West.

Overall, there was a 0.2% fall in the inactivity rate. Four regions showed rises in inactivity: the East Midlands, Yorkshire and the Humber, Northern Ireland and the West Midlands. There were large falls in inactivity in Wales, the North East and South East.

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