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Our labour market analysis

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September 2011

Inclusion Comment

The labour market figures published on 14 September were extremely poor, even compared to a poor few months.

Employment fell sharply, and unemployment and inactivity rose. The less precise monthly changes showed sharper falls in employment and rises in inactivity.

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

JSA flows into long-term unemployment are continuing to rise, though this month there are small signs of stabilisation in the flow rates for shorter term claimants. The proportion reaching 12 months has now risen to 11.3%. The overall pattern is worsening. Unless action is taken, the proportion reaching 12 months will rise, possibly over the 13.4% experienced at the worse point of the recent recession.

Youth unemployment is a particular concern this month. There has been a sharp rise in the numbers of unemployed young people who are not in full-time education. On all counts the position of young people is worsening. The number of long-term unemployed youth is rising (both survey and claimants).

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

Key Facts

Unemployment is 2,510,000, up 16,000 on last month’s published figure, and the unemployment rate is 7.9%, up 0.07%, on last month.
The number of claimant unemployed is 1,580,900, up 20,300, and the claimant rate is 4.9%.
Youth unemployment (not including students) is 709,000 , up 91,000 in the quarter, 9.7 % of the youth population (up 0.4 % in the quarter)
Youth unemployment (including students) is 973,000, up 78,000 on the quarter.
There are 5.6 unemployed people per vacancy. Inclusion estimates this number will continue to rise to 5.8.
Employment is down 69,000 in the quarter to 29.17 million. Since last month’s published figure, employment has gone down by 96,000.
The employment rate is 70.5% (down 0.2% on last month's published figure and down 0.2% in the preferred quarterly measure).

The latest unemployment figure is 2,510,000, which is a rise of 16,000 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 stayed at 7.9%.

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 latest data shows the proportion not claiming JSA roughly stable at 40% (1,039,000).

Youth long-term unemployment (which can include students) rose by 18,000 from last month's figure and is now 352,000. The claimant count measure, even if one adds in the remaining young people on programmes that are finishing, remains far behind at 136,000, and is rising.

Adult long-term unemployment on the survey measure is now 604,000. The claimant count measure, including people on programmes, has risen to an estimated 248,300.

The 18 to 24 year olds youth unemployment rate (including students) rose to 18.7% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is now 6.3% and for those aged 50 and over it is 4.7%. The quarterly change has been up 77,000 for 18 to 24 year olds, up 20,000 for 25 to 49 year olds, and down 21,000 for the over-50s.

The number of out of work young people who are not in full-time education has risen in the last quarter by 91,000, or 14.1%. The number of young people (including students) who are unemployed has risen by 78,000. The number of out of work young people not in full-time education (1.455 million) has risen by 56,000 since last month’s figures.

The number of new JSA claims rose in August 2011 by 2,000. Meanwhile the number of leavers rose faster, by 9,000.

We estimate that the ‘leavers rate’ – leavers as a proportion of those who could leave the claimant count – has fallen sharply to 15.8% in August 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 20,300 in August, taking the total to 1,580,900. The rise is smaller than in the last two months. In July, the number of lone parents claiming JSA rose by 3,175, very much smaller than the seasonally adjusted total rise in JSA that month (33,700).

These measures continued to show a poor indication for people becoming long-term unemployed. There was a small improvement for shorter term claimants, 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. The trends for longer-term unemployed groups are 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 11.3%.

Vacancies (in the ONS survey of the whole economy) slid downward this month to 452,000. 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 5.8 in next month’s figures. The figure for vacancies as a percentage of the unemployed has now fallen to 17.4%.

<i>Inclusion’s</i> analysis of Jobcentre Plus vacancies shows a rise of 9,000 in full-time vacancies. There was a seasonally adjusted total of 240,000 new vacancies a month in June-August.

Employment fell by 96,000 on the figure published last month, to 29,169. The headline quarterly fall was 69,000.

The employment rate is 70.5% (down 0.2% on last month's published figure and down 0.2% in the preferred quarterly measure). Employment is down 69,000 on the quarter.

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 since early 2010, which had turned down substantially and now appears broadly stable.

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 (114,295 in July 2011) or other lone parent JSA claimants (7,655) are included in the benefit measure.

This quarter, only four regions showed rises in the employment rate, led by Scotland. The employment rate fell in seven regions, with particularly large falls in Wales and the East Midlands.

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

Overall, there was no change in the inactivity rate. Five regions showed rises in inactivity, with a particularly large rise in Wales. There were large falls in inactivity in the North East, Yorkshire and the Humber, and Scotland.

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