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Our labour market analysis

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May 2012

Inclusion Comment

The labour market figures published on 16 May were good, apart from those on long-term unemployment – and particularly long-term Jobseeker’s Allowance claimants – where the monthly rise for long-term (12-month plus) unemployed adults was 19,500, the highest since consistent records began in 1997.

The proportion of Jobseeker’s Allowance claimants becoming 12-month unemployed has risen again and is now 17.5%, the highest figure since the Jobseeker’s Allowance regime was introduced in 1996.

The Jobseeker’s Allowance claimant count fell by 13,700. This was owing to falls in new claims rather than people leaving benefit. The number of new claims has fallen in 10 of the past 12 months giving a total fall of 15%. The proportion of people leaving the claimant count (or the ‘leavers rate’) remains almost the lowest since 1996, when the benefits regime for claimants was intensified.

The Jobseeker’s Allowance duration flow figures show that the late 2011 improvement in flow rates for short-term claimants has now been reversed, with increasing numbers staying longer on benefit.
The trend towards longer lasting Jobseeker’s Allowance benefit claims seems to be established now, leading to increased referrals to the Work Programme.

These patterns are occurring when employment rises, unemployment on the international standard falls and Jobcentre Plus vacancies improve.

The number of workless young people not in employment, full-time education or training remains high, at 1.42 million (not including students), 19.5% of the youth population.

Youth unemployment (including students) fell this month by 17,000 to 1,020,000, or 14.0% of young people.

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Key Facts

Unemployment is 2,625,000, down 25,000 from last month's published figure, and the unemployment rate is 8.2%, down 0.1 percentage points on last month.
The number of claimant unemployed is 1,590,300, down 13,700 and the claimant rate is 4.9%.
Workless young people (not in employment, full-time education or training) is 1,419,000, down 25,000 in the quarter, representing 19.5% of the youth population (down 0.3 percentage points in the quarter).
Youth unemployment (including students) is 1,021,000, down, 17,000 in the quarter.
There are 5.7 unemployed people per vacancy. Inclusion estimates that the number will remain at this level next month.
The employment rate is 70.5% (up 0.1 percentage points on last month's published figure and 0.2 percentage points in the preferred quarterly measure).

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The latest unemployment figure is 2,625,000, which has fallen by 24,000 from the figure published last month. Inclusion estimates, on the basis of later claimant count figures, that unemployment may rise next month, and perhaps fall the month after, although this remains highly uncertain. The unemployment rate dropped 0.1 percentage point to 8.2%.

In previous recessions, the proportion of unemployed people not claiming benefit shrunk to around zero. This recession, we started with a historically high proportion of unemployed people not claiming Jobseeker’s Allowance. The latest data show that the proportion not claiming Jobseeker’s Allowance is roughly stable, at 39% (1,016,000).

Youth long-term unemployment (which can include students) fell by 2,000 from last month’s figure and is now 399,000.
The youth Jobseeker’s Allowance count, even if one includes young people on training allowances in Northern Ireland, remains far behind at 171,100, and is rising.

Adult long-term unemployment on the survey measure is now 623,000. The claimant count measure, including people on training allowances, is rising, at 325,100.The number of adults counted as having been on Jobseeker’s Allowance for more than one year has risen from 203,000 in March 2011 to 322,900 now, a 60% rise.

The 18 to 24 year old youth unemployment rate (including students) dropped to 19.8% of the economically active, excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is now 6.4%, and for those aged 50 and over it is 4.8%. The quarterly measure has decreased by 12,000 for 18 to 24 year olds, by 25,000 for 25 to 49 year olds, and by 3,000 for the over-50s.

The number of out of work young people who are not in full-time education (1.42 million) has fallen in the last quarter by 25,000, or 1.7%. Most of this fall is accounted for by a fall in inactivity rather than a fall in unemployment.

The number of unemployed young people has fallen by 9,000 since last month’s figures to 1,020,000.Meanwhile, the number of young Jobseeker’s Allowance claimants fell last month by 10,000 to 470,000. There are 223,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance.

The number of new Jobseeker’s Allowance claims fell by 5,400 this month, to 281,500. Meanwhile the number of leavers rose by 4,900 to 295,700.

Inclusion estimates that the ‘leavers rate’ – people who have left the claimant count as a proportion of those who could leave it – improved a little, to 15.7%. This is still close to the lowest leavers rate since the Jobseeker’s Allowance regime was introduced in 1996.

The Jobseeker’s Allowance claimant count fell by 13,700 in April, taking the total to 1,590,300. Last month's change has been revised to a fall of 5,400 from a published rise. In March, the number of lone parents claiming Jobseeker’s Allowance fell by 765.

These measures show a worsening for most groups, and particularly for longer-term claimants who are on the Work Programme; short-term claimants are supported by Jobcentre Plus. The trends for short-term claimants are not much better.

These figures are based on those in Chart 10, but show the patterns for the same people passing through successive quarterly thresholds. The chart shows that the rise in new claimants staying to three and six months is driving increasing proportions becoming long term unemployed. The proportion claiming for 12 months has now risen to 17.5%. The previous time this level was reached was February 1996 (when the trend was downwards from the 25% 1992 peak).

Vacancies (in the Office for National Statistics survey of the whole economy) decreased this month to 457,000. As the number of vacancies is quite volatile, and frequently revised, the Office for National Statistics uses a three-month average.

The Office for National Statistics figures for unemployed people per vacancy show there are 5.7 unemployed people per vacancy compared with 2.3 in March 2008. Inclusion estimates that the figure will remain at this level next month. The proportion of vacancies as a percentage of the number of unemployed people is now 17.6%.

Inclusion’s analysis of Jobcentre Plus vacancies shows a 5,000 rise in full-time vacancies. There was a seasonally adjusted total of 266,000 new vacancies a month in the quarter from February to April. This means the number of new full-time vacancies is lower than the number of new Jobseeker’s Allowance claimants. The number of new full-time vacancies was 94% of the number of new Jobseeker’s Allowance claims.

Employment rose by 61,000 on the figure published last month to 29,233,000. The headline quarterly rise was 105,000.

The employment rate rose by 0.1 percentage points this quarter, to 70.5%. The annual fall has been 0.2 percentage points since the quarter from January to March 2011.

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. The number of people inactive owing to long-term sickness had been falling sharply, a trend not found in the benefit figures, but it rose in the latest two figures.

This shows claimants of Income Support as lone parents, plus lone parents claiming Jobseeker’s Allowance (the red squares) and survey figures for all those economically inactive looking after family (including couple families). The survey figures are showing a rising trend and benefit measures are moving in the opposite direction.

This quarter, eight regions showed a rise in the employment rate. These were led by Yorkshire and Humber, and the Midlands. The employment rate fell in four regions, the South West, the North West, Wales and London.

Eight regions showed an improvement in the unemployment rate this quarter. Four showed a worsening. The worst rises were in the South West, the North West and the North East.

Overall, there was a 0.1 percentage point fall in the inactivity rate. Five regions showed rises in inactivity, led by the South West, the North West, Wales and London. There were large falls in inactivity in the North East, East Midlands, and the South East

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