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Our labour market analysis

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November 2011

Inclusion Comment

The labour market figures published on Wednesday 16 November showed that youth unemployment had passed the one million mark.

For this measure, which includes students, this is the highest figure on record. Excluding students, 730,000 young people were unemployed. This is the highest figure since January 1994.

In response, Inclusion calls for a £150 million subsidy focused on creating new jobs for long-term unemployed young people on the Work Programme.

Almost one in five young people (19.8%) were out of work and not students. This includes both unemployed and inactive young people. This is very close to the recession peak of 20.1% in October–December 2010. Other than that, the figure was last at that level in October 1995.

There was a further substantial rise in ILO unemployment. If ILO unemployment follows the JSA claimant count, the rises could begin to tail off.

The JSA claimant count rose by less than in previous months.

Download Inclusion's November 2011 labour market statistics analysis (Excel)

Key Facts

Unemployment is 2,622,000, up 56,000 from last months published figure, and the unemployment rate is 8.3%, up 0.2%, on last month.
The number of claimant unemployed is 1,598,400, up 5,300 and the claimant rate is 5%. Youth unemployment (not including students) is 730,000, up 59,000 in the quarter, 10 % of the youth population (up 0.82 % in the quarter). Youth unemployment (including students) is 1,016,000 , up, 67,000 on the quarter.
Youth unemployment (including students) is 1,016,000, up 67,000 on the quarter.
There are 5.7 unemployed people per vacancy. We estimate it will continue to rise towards 5.8.
The employment rate is 70.2% (-0.2 % on last month's published figure and -0.4 % in the preferred quarterly measure).

The latest unemployment figure is 2,622,000, which is a rise of 56,000 on the figure published last month. We estimate, on the basis of later claimant count figures, that unemployment will rise next month.

In previous recessions, the proportion of unemployed people not claiming benefits shrank to around zero. In this recession, it only fell to 33%. In the 2010 recovery, the proportion of the unemployed people not claiming Jobseeker’s Allowance (JSA) rose to 42% and has since fallen back. The latest data shows that the proportion not claiming JSA is roughly stable at 40% (1,043,000).

Youth long-term unemployment (which can include students) rose by 9,000 on last month’s figure and is now 379,000. The claimant count measure remains far behind at 133,800, and is rising sharply. The six-month-plus claimant figure is expected to continue rising as programmes that automatically removed people from benefit have terminated.

Adult long-term unemployment on the survey measure has now risen to 609,000. The claimant count measure has risen to 232,000. The 12-month-plus claimant figure is expected to continue rising, as programmes that automatically removed people from benefit have terminated.

The youth unemployment rate (18–24 year olds, including students) has now risen to 19.6%. The rate for those aged 25–49 is now 6.5% and for those aged 50 and over it is 4.7%. The rise in unemployment rates since the recession started has been 7.3 percentage points for young people, 2.6 points for those aged 25–49 years and 1.9 points for the over-50s.

Overall youth unemployment has passed the one million mark in the wrong direction, at 1,016,000. It was last this high in 1986. The figure includes students. Excluding full-time students, youth unemployment is 730,000, the highest since 1994. One in five (19.8%) young people are out of work, either unemployed or inactive. The total number is 1.446 million.

The number of new JSA claims continued to slide downwards this month. Meanwhile the number of leavers rose marginally.

<i>Inclusion</i> estimates that the ‘leavers rate’ (leavers as a proportion of those who could leave) has risen from last month’s 15.7% to 15.8%. These low levels of the leavers rate were last found in a sustained fashion before 1997.

The JSA claimant count rose by 5,300 in October, taking the total to 1,598,400. The rise was lower than last month’s 13,400 (after revisions) but still sharp.

There were negative changes on these measures for all groups The trends for longer-term unemployed groups are particularly negative and are now back to recession levels. The threshold flows through both six and nine months are now back to levels last seen in 1996, before the introduction of the JSA regime and before the New Deals took young people off benefit in this duration group.

These figures are based on those in Chart 10. While the flow rates through three months are lower than at the recession peak, the worsening picture for those who stay on benefits is increasing the proportions becoming long-term unemployed. This is happening to people well before they become eligible for the Work Programme. The numbers becoming eligible for the Work Programme will therefore rise further.

Vacancies (in the ONS survey of the whole economy) slid downward this month to 462,000. As the number of vacancies is quite volatile, the ONS uses a three-month average.

According to the Office for National Statistics, there are now 5.7 unemployed people per vacancy compared with 2.3 in March 2008. We expect this to rise further, though may still round to 5.7%.

<i>Inclusion’s</i> analysis of Jobcentre Plus vacancies shows a rise in full-time vacancies. There was a seasonally adjusted rise of 7,000, taking the total to 248,000 new vacancies a month in August–October.

Employment fell by 33,000 on the figure published last month, to 29,069,000. The headline quarterly fall of 197,000 includes two months with even greater monthly falls.

The employment rate fell to 70.2%. It has fallen sharply in each of the last three months’ figures. It was last at this level in 1996 (August–October).

This shows claimants of Incapacity Benefit (IB), and Employment and Support Allowance (ESA, shown by the red dots), compared with survey figures for the economically inactive owing to long-term sickness. There has been a slow fall in the numbers claiming ESA or IB. The Department for Work and Pensions’s experimental estimates (the past few months) show a sharper fall than the actual previous trend.

This shows claimants of Income Support as lone parents, plus lone parents claiming JSA (the red squares) and survey figures for those who are economically inactive and looking after family. Lone parents who now have to claim JSA because their youngest child is seven or older (113,840 in September 2011) or other lone parent JSA claimants (7,860) are included in the benefit measure. Both measures are highly volatile.

This quarter, all regions except the South West and North West showed falls in the employment rate. There were particularly large falls in the North East, the East of England and the South East.

Only the North West showed an improvement in the unemployment rate this quarter. The largest rises were in Yorkshire and the Humber, the North East and Wales.

There was, overall, a small rise in the inactivity rate. Three regions showed falls in inactivity, while seven showed rises. Yorkshire and the Humber, the South West and Wales showed falls in inactivity.

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