Download Inclusion's analysis from October 2008
The October labour market statistics (out 15 October) were the worst for many years. The rate of rise of unemployment is (depending on how you count it) the fastest since 1981 or 1991.
We do not know how far unemployment will rise, but the speed of rise will place pressure on all parts of the welfare to work system. The forecast of two million unemployed by Christmas (international measure) and one million JSA claimants by Christmas now looks probable - even without adding in extra JSA claimants from the changes to lone parent benefits and the introduction of Employment and Support Allowance
While we concentrate on unemployment, because those are the very latest figures, we should not forget the wider numbers out of work. We estimate the total number of workless benefit claimants to be 4.44 million. This includes IB claimants, lone parents and others on income-related benefits. When DWP produces figures for May 2008 next month, we expect to revise this figure up.
The 4.44 million on workless benefits compares with 3.95 million people who want to work (from the Labour Force Survey) , with 1.79 million unemployed and 2.16 million inactive who want to work. The overlap is far from complete (and, in particular there are many women non-claimants in the want to work figure, both unemployed and inactive).
Chart 1: All workless benefits claimants
JSA claimant numbers are now up to 939,900 (September). This is up 31,800 a month. If the rise carries on at this rate, it will be over one million in the December figures. These are figures up to 11 September, which is before the banking system went into panic mode.
Chart 2: Jobseeker's allowance claimants
Our estimates for claimants on inactive benefits have carried on down. The survey figures for inactivity show a rise in the last couple of months for the long-term sick and a fall back to very low levels for 'looking after family, home' which includes parents and carers. Overall, inactivity, with the exception of students, is down.
Chart 3: Claimants for 'inactive benefits' - incapacity benefits, lone parents, etc
New JSA claims have now reached 261,300 a month. Outflows are up too, to 227,400.
The rise in monthly inflows over the last six months was 57,000, or 28%. The last time there was a rise in new claims on this scale was in 1991. The relentless rise in new claims must be putting Jobcentre Plus' new claim and interview process under severe pressure.
Chart 4: Jobseeker's allowance - new claims and leavers
In previous recessions the rates of staying on JSA have risen for every duration group. In the last (1991-92) recession, the proportion of new claimants becoming twelve-month unemployed reached 25%. That proportion is now below 10%.
Chart 5 breaks down the patterns for each duration group. Short-term claimants (under six months) are continuing to move off JSA at historically high levels. Only 45% of under three-month JSA claimants in June were still claiming in September. 55% had left JSA. The pattern for the next longest group was a little worse, but no worse than it was in June. For those who are already longer-term unemployed, at six months or more, there is more evidence of rising staying-on rates.
Chart 5: Jobseeker's allowance - claimants staying through each three-month threshold (seasonally adjusted)
