Download Inclusion's analysis from March 2009.
Unemployment passed two million by Christmas last year, the March labour market statistics from the Office for National Statistics show. The actual figure was 2.029 million. There is no sign of slackening in the rate of growth of unemployment. Inclusion expects the figures for January-March 2009, to be published in May, to be around 2.26 million.
Vacancies are also down, now being unambiguously below the 500,000 mark. This means that, at Christmas, there were four unemployed people to every vacancy. In February, if Inclusion’s estimate for unemployment is close to correct, that has risen further so there are five unemployed people per vacancy. In January 2008, there were 2.4 unemployed people per vacancy.
Employment is very slightly up in the latest figures, and inactivity is down.
Chart 1: UK unemployment (ILO)
Unemployment was 2,029,999 in the November-January quarter. This was an increase of 8.9% on the August-October quarter. The increase was faster for men (a 10.7% rise) than for women (a 5.9% rise). There are 1.2 million men and 0.8 million women unemployed.
Chart 2: Unemployment rates by age
The unemployment rate for young people (18-24) has now reached 14.6%. This compares with unemployment rates of 4.9% of those aged 25-49 and of 3.8% for the over-50s. The youth unemployment rate is now at its highest since March 1996. The increase in unemployment rate has been sharpest for 18-24s, with a 2.4 percentage point rise since January 2008, with rises for those aged 25-49 at one percentage point and for the over-50s at 0.9 percentage points. The percentage increase has been fastest for the over-50s, partly because their unemployment was very low (2.9%) in January 2008.
Chart 3: Jobseeker’s allowance – claimant count, new claims and leavers
New claims for jobseeker’s allowance (JSA) are shown by the ONS statistics as 359,500, an increase of 29,900 in the month, or 9.1%. However, these are seasonally adjusted figures to show the trends. The unadjusted figures show 485,836 new claims or 112,116 a week. This is the fifth highest figure since records began in 1983, and higher than any month in the 1990s recession. The numbers of leavers also rose, as in previous recessions. This is because there are more people to leave, although the proportion of claimants leaving each month has dropped from 26% in April 2008 to under 20% in February 2009.
Chart 4: Jobseeker’s allowance – claimant count
The claimant count number continues to accelerate upward. Last month’s figure has been revised up by 20,000 so the latest total of 1,391,000 is 158,100 higher than the last figure published rather than the 138,400 change figure given. The latest number will be open for revision next month.
The gap between unemployment and the JSA claimant count remains large, but is shrinking. Overall, 57% of the unemployed claim JSA.
Chart 5: Jobseeker’s allowance – claimants staying through each three-month threshold (seasonally adjusted)
The rates of staying on JSA have risen sharply this month for claimants who have been on JSA for all durations. The improvement seen last month has not been sustained. The increases since January 2008 have been over 10 percentage points for the two shortest duration groups and nearly 10 percentage points for those passing through 12 months (from 9 months). Rises are lower where people can be sent off benefit to new deal options, as in the 6-9 months staying to 9-12 months group. These rises in the rates of staying on for a further three months have been close to parallel for the duration groups, following a low point in Autumn-Winter 2007.
However, the rate of becoming 12-month (long-term) unemployed has risen much less sharply. This is owing to the very low rates of becoming three-month claimants in winter 2007-08, and the slow acceleration in rates of staying on past subsequent thresholds. The rise in the proportion staying through 12 months has only been 1.9 percentage points to date, though is expected to rise faster as the rise in staying-on rates for shorter duration groups feeds into the 12-month figure through the year.
Chart 6: Jobseeker’s allowance – proportion of starters in month becoming longer-term unemployed
A different way of looking at the long-term unemployed figures is to look at the proportion of people who claimed JSA in a particular month who are still there. For people who started claiming in the quarters to February 2008, August 2008 and November 2008, the curves showing their progress demonstrate increasing proportions remaining on benefit in each successive quarter. The red dot shows the proportion staying to three months in February 2009, at nearly 53%.
In an equivalent phase of the last recession, in July 1990, 53% of new claimants became three-months unemployed. Nearly 19% of those new claimants became 12-months unemployed. Unless the rates of staying on through each later quarterly threshold fall, which would require new policies, there is every chance of 15-16% of these claimants becoming 12-15 month unemployed in February 2010. We expect that more active provision compared with 1990-91 to make some difference, though it remains to be seen how large a difference.
Chart 7: Vacancies – whole economy survey
Vacancies have now fallen to 445,000 in the ONS vacancy survey. The three-month average, which last month was just over 500,000, has now fallen to 482,000. The monthly fall was 30,000, or 6.3%. These are vacancies surveyed by the ONS for which employers are actively recruiting, and the intention is to measure all vacancies in the economy. Therefore, the fall in the ratio of unemployed to vacancies is particularly worrying. In January 2008, vacancies were 43% of the number of unemployed (ILO unemployed). This has now fallen so that in December 2008, vacancies were 25% of the unemployed and in February, vacancies were 20% of Inclusion’s estimate of the unemployed.
Chart 8: Vacancies and unemployment ratio
Inclusion’s analysis of Jobcentre Plus vacancies considers only those that can count as a job outcome for Jobcentre Plus and providers – jobs lasting for 16 hours or more a week. In February 2009, 29% of new Jobcentre Plus vacancies were for jobs under 16 hours a week. Inclusion has adjusted the Jobcentre Plus vacancies for seasonal factors and averaged the results over a three-month window to produce figures on a similar basis to the ONS’ survey of employers.
These estimates show a fall in Jobcentre vacancies over the year to February 2009 of 35.3%, compared with a fall in the ONS vacancy survey of 29% for the three-month average series.
In the month to 6 February 2009, there were 219,302 new Jobcentre Plus 16-hour plus vacancies compared with 485,836 new JSA claimants (before seasonal adjustment) and 1,391,000 total JSA claimants. This is without taking into account Employment and Support Allowance and other Incapacity Benefits claimants or lone parents on Income Support.
The fact that Jobcentre Plus vacancies are falling faster than overall vacancies shows that efforts to increase vacancies available to Jobcentre Plus customers have not yet borne fruit.
Chart 9: Vacancies – Jobcentre Plus new 16-hour plus vacancies
Chart 10: UK employment
The number of people employed was up by 2,000. There was, however, a fall of 23,000 employees, a rise of 37,000 self-employed and falls in the smaller groups classed as ‘in employment’. There was a 14% quarterly rise in involuntary temporary working and a 10.3% rise in involuntary part-time working.
Chart 11: Employment rate in the UK
The rise in employment produced a small rise in the employment rate (though within 0.1 percentage points).
Chart 12: Claimants for inactive benefits and the economically inactive –incapacity benefits
The latest figures for the reasons for inactivity show a small monthly rise in the numbers inactive because of long-term sickness but a quarterly fall. Earlier trends showed that these figures followed similar trends to numbers of claimants for Incapacity Benefits (now Employment and Support Allowance). In previous recessions people who had been long-term unemployed moved onto these benefits. This recession has coincided with greater moves to encourage claimants back into the labour market through the introduction of the Employment and Support Allowance and Pathways to Work.
Chart 13: Claimants for inactive benefits and the economically inactive - lone parents
The latest figures for inactivity owing to ‘looking after family, home’, show a sharp fall. Earlier figures showed a broad parallel pattern with numbers claiming workless benefits as lone parents. It is too early to say whether the fall in inactivity is related to the increasing requirements on workless lone parents to look for work (which would classify them as unemployed). It is possible that this drop relates to other changes in family work patterns, as non-working partners seek work to replace income lost as the other partner lost their job.
Chart 14: Employment rate quarterly change in regions – Nov 2008-Jan 2009
While employment has risen slightly, there are strong regional differences. Out of 12 regions and nations, the employment rate has risen in only three, the North West, London and the eastern region. Other regions fell, some by quite large percentages. However, these figures vary quite a lot between monthly releases, so some of the changes may be simply statistical differences between different people surveyed. The positive pattern for London, or at least better than the rest of the country, comes through from a number of independent sources so has a higher reliability. London’s employment rate is now higher than the North East, North West, West Midlands, Wales and Northern Ireland.
Chart 15: Unemployment rate quarterly change in regions – Nov 2008-Jan 2009
Unemployment rates are up in all regions other than London. The biggest rises are in Northern Ireland, the West Midlands, Wales, Eastern and South West England.
Chart 16: Inactivity rate quarterly change in regions – Nov 2008-Jan 2009
Inactivity is down overall, and is down in seven English regions, with the exceptions of Yorkshire and the Humber, and the South East. Inactivity is, on the other hand, up in Wales, Scotland and Northern Ireland. Wales and Northern Ireland have the highest inactivity rates.
