Download Inclusion's analysis from February 2009.
As we had suggested in last month’s analysis, unemployment did not top the two million figure in February’s labour market statistics. We do expect the two million mark to be crossed with the November-January figures (centred on December) that will be published next month.
Otherwise, vacancies are carrying on down, employment is down, and unemployment is up on all measures. The most positive sign is that inflows to JSA are flat this month, and flows through to longer durations for JSA claims are a little down. We suspect that the next figures for both sets are likely to be worse, as the cut-off date for the count and new claims was 8 January, before many new-year sales had finished.
Chart 1: UK unemployment (ILO)
Unemployment reached 1,971,000 in the October-December 2008 period. This was a 8.0% increase over the quarter before. Inclusion forecasts that if unemployment rises at the same rate as the Jobseeker’s Allowance (JSA) claimant count, the November-January figure will be between 2.03 million and 2.11 million. Therefore, the two million by Christmas mark is still on course.
There is no sign of any slackening in the rise of unemployment.
Chart 2: Unemployment rates by age
In the last quarter, there was a 38,000 increase in unemployed 18-24 year olds, a 57,000 rise in unemployed 25-49s and a 43,000 rise in unemployed people over 50. The unemployment rate for young people has now reached 14.5%, compared with 4.7% for 25-49s and 3.7% for the over-50s. However, the rise in unemployment has been most rapid for the over-50s at 16.4% this quarter, followed by 7.1% for the 25-49s and 6.5% for the 18-24s.
Chart 3: Jobseeker’s allowance – claimant count, new claims and leavers
JSA inflows slackened in the month to 8 January. However, too much should not be read into a one-month figure at a time when many Christmas and new-year sales jobs finished after the 8 January. The annual rise is 55%. Numbers of JSA leavers rose. This is the pattern expected when there are more people who could leave JSA and follows experience in previous recessions. The annual rise in leavers is 15.3%.
Chart 4: Jobseeker’s allowance – claimant count
The claimant count number is accelerating upward. Last month’s figure has been revised up by 2,000 so the latest total of 1,233,000 is 75,800 higher than the last figure published rather than the 73,800 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, 55% of the unemployed claim JSA. More men claim JSA, with 78% of unemployed men claiming, compared with 40% of unemployed women. The increasing effect of changes to lone parent benefit rules is raising the numbers of lone parents claiming JSA.
Chart 5: Jobseeker’s allowance – claimants staying through each three-month threshold (seasonally adjusted)
The rates of staying on JSA have fallen back this month for claimants who have been on JSA for all durations. The increases since January 2008 have been 8-9 percentage points for all duration groups except those where young people can be sent off JSA onto New Deal Options, where the rise is only 6.4 percentage points, and the longest term claimants we can show. 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.
This could be a one-month blip, or it could be that the ending of the period of denial with the claimant count passing the one million mark in December has produced some effect on Jobcentre Plus activity.
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 1.7 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 January 2008, July 2008 and October 2008, the curves showing their progress show increasing proportions remaining on benefit in each successive quarter.
The latest group, the people shown as three- to six-month unemployed in the February figures, had a rate of becoming three-month unemployed of over 50%. 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 December 2009.
Chart 7: Vacancies – whole economy survey
There are now less than 500,000 vacancies shown in the ONS vacancy survey. In January 2009, there were 479,000 vacancies for which employers were actively recruiting. The rate of fall of the vacancy number steepened this month. The monthly drop was 35,000, or 6.8%.
The Ministerial press statement still says there are just over half a million vacancies – this follows from using the three-month average figure when November and December were both above 500,000.
Chart 8: Vacancies and unemployment ratio
Chart 9: Vacancies – Jobcentre Plus new 16-hour plus vacancies
Inclusion’s analysis centres on vacancies which can count as a job outcome for Jobcentre Plus and providers – jobs lasting for 16 hours or more a week. In January 2009, 28% 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 January 2009 of 24.4%, compared with a fall in the ONS vacancy survey of 26.2% for the three-month average series.
In the month to 2 january 2009, there were 85,486 new Jobcentre Plus 16-hour plus vacancies compared with 313,000 new JSA claimants (before seasonal adjustment) and 1,233,000 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 in parallel with overall vacancies shows that efforts to increase vacancies available to Jobcentre Plus customers have not yet borne fruit.
Chart 10: UK employment
The latest monthly figure for employment shows a 32,000 fall over the last published figure. The ONS advises using quarterly changes, which show a 45,000 fall for all ages and a 63,000 fall for working age people.
Chart 11: Employment rate in the UK
Chart 12: Claimants for inactive benefits and the economically inactive – incapacity benefits
We now have some slightly more up to date figures for claimants of Employment and Support Allowance or other incapacity benefits, and for lone parent claimants of income support, the new figures being for August 2008. Both groups have been subject to changes in benefits and conditionality. We do, however, have figures for the economically inactive who give either long-term sickness or looking after children or family as a reason. Incapacity benefits claimants are likely to give the first reason, and lone parents the second.
The number of the inactive, long term sick was rising sharply from mid-2008, coincident with rises in new JSA claims, but has since dropped back. The latest IB figures show a rather lower rate of fall compared with previous quarters. The patterns for lone parents follow the ‘inactive, looking after family’ quite closely with a large drop in late 2007, but since then there have been movements in those primarily looking after family that have not been followed by lone parent numbers. The most recent rise in ‘inactivity, looking after family’ could easily be a displacement activity as jobs are seen as no longer available. Lone parent benefit numbers (excluding those on JSA where the rise in conditionality happened later than these figures) were up this August, whereas the summer holiday last year just produced a slowing in the rate of fall.
Chart 13: Claimants for inactive benefits and the economically inactive - lone parents
Chart 14: Employment rate quarterly change in regions – Sep-Nov 2008
Chart 15: Unemployment rate quarterly change in regions – Sep-Nov 2008
Chart 16: Inactivity rate quarterly change in regions – Sep-Nov 2008
