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Our labour market analysis

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October 2011

Inclusion Comment

The labour market figures published on 12 October were extremely poor, even compared to a poor few months.

Employment fell sharply and unemployment and inactivity rose. The less precise monthly changes showed falls in employment and a sharp rise in unemployment.

The rise in Jobseeker’s Allowance (JSA) claims continues to be the result of a decline in leavers rather than a rise in new claims. New claims are flat to falling. As yet, there are no official figures for reassessed Incapacity Benefit (IB) claimants starting JSA claims. The rise in ILO unemployment is following fairly closely the trend for JSA claimants.

JSA flows into long-term unemployment are continuing to rise, though over the last two months there are signs of stabilisation in the flow rates for shorter term claimants. The proportion reaching 12 months has now risen to 11.9%. The overall pattern is worsening. The proportion reaching 12 months will rise, possibly over the 13.4% experienced as the recession was in its downward phase, unless further action is taken.

Youth unemployment did not pass the one million mark but continues to worsen. The total number of unemployed young people rose. There has been a sharp rise in the number of unemployed young people who are not in full-time education. The quarterly rise in unemployed young people not in education (78,000) is two-thirds of the total rise in unemployment (114,000).

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

Key Facts

Unemployment is 2,566,000, up 56,000 on last month's published figure, and the unemployment rate is 8.1%, up 0.2% on last month
The number of claimant unemployed is 1,597,200, up 17,500, and the claimant rate is 5.0%
Youth unemployment (not including students) is 721,000, up 77,000 on the quarter, 9.9% of the youth population (up 1.1% on the quarter)
Youth unemployment (including students) is 990,000, up 73,000 on the quarter
There are 5.6 unemployed people per vacancy. We estimate this figure will continue to rise to 5.7
Employment went down by 178,000 on the quarter to 29.1 million. Since last month’s published figure, employment is down 68,000
The employment rate is 70.4% (down 0.1% on last month's published figure and down 0.3% in the preferred quarterly measure)

The latest unemployment figure is 2,566,000, which is a rise of 56,000 from the figure published last month. We estimate, on the basis of later claimant count figures, that unemployment will continue to rise next month, although this remains highly uncertain. The unemployment rate rose by 0.2% to 8.1%.

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 JSA. The latest data show the proportion not claiming JSA roughly stable at 39% (1,041,000).

Youth long-term unemployment (which can include students) rose by 18,000 from last month's figure and is now 370,000. The claimant count measure, even if one adds in the remaining young people on programmes that are finishing, remains far behind at 140,000, and is rising.

Adult long-term unemployment on the survey measure is now 610,000. The claimant count measure, including people on programmes, is stable at 246,900.

The 18 to 24 year olds youth unemployment rate (including students) rose to 19.1% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is now 6.5%, and for those aged 50 and over it is 4.5%. The quarterly change has been up 93,000 for 18 to 24 year olds, up 54,000 for 25 to 49 year olds, and down 14,000 for the over-50s.

The number of out of work young people not in full-time education rose in the last quarter by 75,000, or 5.4%. The number of young people (including students) who are unemployed has risen by 74,000. The number of out of work young people not in full-time education (1.441 million) dropped by 13,000 since last month’s figures.

The number of new JSA claims fell in September 2011 by 4,000. Meanwhile the number of leavers dropped by 1,000.

We estimate that the ‘leavers rate’ – leavers as a proportion of those who could leave the claimant count – is broadly stable. It was at a historically low level of 15.6% in September 2011. This is lower than in any period of the recent recession. The last time the leavers rate was this low was in January 1998.

The JSA claimant count rose by 17,500 in September, taking the total to 1,597,200. The rise is a little smaller than last month’s rise. In August, the number of lone parents claiming JSA rose by 1,855, very much smaller than the seasonally adjusted total rise in JSA that month (19,000).

These measures continued to show a poor indication for people becoming long-term unemployed. There was an improvement for shorter term claimants (under six months), but flow rates for these groups, who are not, and have not been, generally eligible for the Work Programme or other provider support, remain poor by historical standards. The trends for longer-term unemployed groups are still below pre-recession levels, but showing rising trends.

These figures are based on those in Chart 10, but show the patterns of the same people passing through successive quarterly thresholds. This shows this month’s slight improvement for the shorter term groups, but earlier deteriorations are still working through to 12 and 15 month numbers. The proportion reaching 12 months has now risen to 11.9%.

Vacancies (in the ONS survey of the whole economy) were steady this month to 462,000. 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 5.6 unemployed people per vacancy compared with 2.3 in March 2008. We estimate this may rise to 5.7 in next month’s figures. Vacancies as a percentage of the unemployed has now fallen to 17.5%.

<i>Inclusion’s</i> analysis of Jobcentre Plus vacancies shows no change in full-time vacancies. There was a seasonally adjusted total of 240,000 new vacancies a month in July-September.

Employment fell by 68,000 on the figure published last month, to 29,101,000. The headline quarterly fall was 178,000.

The employment rate fell 0.3% on the quarter to 70.4%. The annual fall from June-August 2010 was 0.3%.

This shows claimants of IB, and Employment and Support Allowance (ESA, the red dots), compared with survey figures for the economically inactive owing to long-term sickness. These show a sharp rise in the survey measures of inactivity owing to long-term sickness from early 2010, which had turned down substantially and now appears broadly stable. This 2010 rise does not appear in the Department for Work and Pensions (DWP) estimates.

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 because their youngest child is seven or more (115,900 in August 2011) and other lone parent JSA claimants (7,905) are included in the benefit measure.

This quarter, only one region, the North West, showed a rise in the employment rate. The employment rate fell in 10 regions, with particularly large falls in Wales, the East of England and Northern Ireland.

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

Overall, there was no change in the inactivity rate. Eight regions showed rises in inactivity, with particularly large rises in the East of England and Wales. There were large falls in inactivity in Yorkshire and the Humber, the North West, and the North East.

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