Download Inclusion's analysis from August 2009
The labour market figures published on 12 August showed some positive features, as well as continued falls in employment, and rises in unemployment and inactivity.
The most optimistic signs were improvements in vacancies on both measures, a flattening in the number of new Jobseeker’s Allowance (JSA) claims and continued improvements in the staying on JSA rates for all duration groups.
New this month is a chart showing the proportion of the unemployed who are NOT claiming JSA. This is a subject we have covered in Working Brief regularly since well before JSA was introduced in 1995-96, but as trends are not moving in the expected direction we are highlighting it in this analysis. This month we have the quarterly DWP benefit figures, and the August release includes the new Employment and Support Allowance that replaced Incapacity Benefit for new claimants in October 2008. Quality assuring the statistics and integrating them with other DWP benefit figures has taken until now to reach publication standard.
Chart 1: UK unemployment (ILO)
The latest unemployment figure is 2,435,000, which is 54,000 above the figure published last month. We estimate, on the basis of later claimant count figures, that monthly rises in unemployment will be around 40-45,000 for the next two months.
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance
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 people not claiming JSA. The proportion not claiming fell, as expected but in the past two months the pattern has changed in an unexpected way, with the proportion of the unemployed who are not claiming JSA rising by 1.2 percentage points last month and maintaining the higher level this month (a 0.1 percentage point rise).
Chart 3: Youth long-term unemployment (six months and over, 18-24)
Youth long term unemployment on the survey measure continues to rise sharply and is now 285,000. The claimant count measure, even if one adds in young people on New Deal options, remains far behind at 107,200.
Chart 4: Adult long-term unemployment (12 months and over, 25+)
Adult long-term unemployment on the survey measure has now risen to 382,000. The claimant count measure, including people on programmes, has risen to an estimated 153,500.
Chart 5: Unemployment rates by age
The youth unemployment rate has now reached 17.2%. The rate for those 25-49 is now 6.2% and for those 50 and over is 4.4%. The rise in unemployment rates since the recession started has been five percentage points for young people, 2.3 points for 25 to 49 year olds and 1.5 points for the over-50s.
Chart 6: Out of work young people
The number of out of work young people who are not in full-time education has risen since January 2008 by 211,000 or 17%. The rise has been within those who are unemployed and not in full-time education. The (larger) number, those who are inactive and not in full-time education, has risen marginally. The rise in the number of young JSA claimants has been slightly sharper than that in survey unemployed – now around 228,00 including those on New Deal options.
Chart 7: Jobseeker’s allowance – claimant count, new claims and leavers
The number of new claims for JSA has now been broadly flat for three months (to July), after seasonal adjustment. Meanwhile the number of leavers rose by 10,000 to 336,000. The claimant count will start falling once the number of leavers is greater than the number of new claims. The gap is now 20,000, when it peaked at 107,000 in February 2009. We estimate that the ‘leavers rate’ – leavers as a proportion of those who could leave, has slightly improved from 17.3% last month to 17.5%. The low point was 15.7% in February 2009.
Chart 8: Jobseeker’s allowance – claimant count
The rise in the JSA claimant count has now slowed to 24,900 in July, taking the total to 1,582,700.
Chart 9: Jobseeker’s allowance – claimants staying through each three-month threshold (seasonally adjusted)
There were positive changes on these measures for all groups. The improvement was particularly marked for the three shortest term groups. The improvement started in April when Jobcentre Plus enhanced its ‘Day One’ service and started using measures such as these to manage Jobcentre performance.
Chart 10: Jobseeker’s allowance – proportion of starters in month becoming longer-term unemployed
These figures are based on those in Chart 9 but show the patterns of the same people passing through successive quarterly thresholds. The impact of the positive changes in claimants staying through the shortest term thresholds are becoming clear, in that the red dot showing the latest shortest-term figures is now below the start point reached three months ago (at the start of the blue line). The impact on the slightly longer term claimants is shown by the blue line being much steeper to the six-month point than any other line on the chart at that stage, showing that very high proportions have been leaving JSA. At this stage, therefore, it does not look as though the proportions of new claimants going on to be long-term claimants will reach the levels shown for the last recession.
Chart 11: Vacancies – whole economy survey
Vacancies (in the ONS survey of the whole economy) have now improved for two months. As the number of vacancies is quite volatile, the ONS gives us a three-month average, which has now reached 427,000. There have been previous one-month improvements and one two-month improvement in summer 2008 (before the crash of Lehman Brothers started a new phase of the recession).
Chart 12: Vacancies and unemployment ratio
‘Vacancies as a percentage of unemployed people’ has now fallen to 17%. Put another way, there are now 5.9 unemployed people per vacancy compared with 2.3 in January 2008.
Chart 13: Vacancies – Jobcentre Plus new 16-hour plus vacancies
Inclusion’s analysis of Jobcentre Plus vacancies shows a small improvement in vacancies that help people off benefits (jobs of 16 hours or more a week). There was a seasonally adjusted rise of 7,000, taking the total to 183,000 new vacancies in June-July.
Chart 14: UK employment
Employment fell by 65,000 since the figures published last month, to 28,933,000. The fall in employment was 10,000 more than the rise in unemployment – the remainder became inactive.
Chart 15: Employment rate in the UK
The fall in employment meant that the employment rate continued to fall – by 0.2 percentage points to 72.7%.
Chart 16: Claimants for inactive benefits and the economically inactive – incapacity benefits
We have included in this chart the DWP experimental figures for Employment and Support Allowance and Incapacity Benefit claimants. These show claimant numbers moving above the comparator group for estimating trends, the economically inactive due to long term sickness or disability. However, the latest figures for the quarterly series (to February 2009) remain broadly in line with the comparator. The latest estimates remain above 2.6 million Incapacity Benefit/Employment and Support Allowance claimants.
Chart 17: Claimants for inactive benefits and the economically inactive - lone parents
This chart includes the DWP experimental estimates too – but this does not include the numbers of lone parents who are now claiming JSA following the change in rules so those with a youngest child aged 12 years or older cannot claim as lone parents.The DWP estimates for lone parent benefit numbers continue to slide while the comparator group (those looking after family or home as a reason for not working) has risen. The DWP estimates that there are 21,845 lone parents with a youngest child of 12 or more who are claiming JSA.
Chart 18: Employment rate quarterly change in regions – April to June 2008
This quarter, the biggest falls in the employment rate have been in the North East, London, the South West and Northern Ireland. The smallest falls were in the West and East Midlands.
Chart 19: Unemployment rate quarterly change in regions – April to June 2008
All regions except Wales have had rises in the unemployment rate this quarter. The largest rises have been in the North East, West Midlands and Scotland.
Chart 20: Inactivity rate quarterly change in regions – April to June 2008
While there was an overall smalle rise in the inactivity rate, London, Northern Ireland and the North East have seen large rises in the inactivity rate. This is a potential concern, particularly if, and we do not yet know whether this is the case, the rise in inactivity is not simply students. Only two regions show falls in inactivity in this release, the West Midlands (a large fall) and Yorkshire and the Humber.
