Making learning and work count

Labour market LIVE from Learning and Work Institute
14 June 2017

  • Unemployment is 1,530,000, is down by 11,000 from last month’s published figure (quarterly headline reduced by 50,000) and the unemployment rate is 4.6%, no change on last month and down 0.1 percentage points on last quarter.
  • The number of claimant unemployed is 802,600, up 26,600 on last year, and the claimant rate is 2.3%.
  • The number of workless young people (not in employment, full-time education or training) is 953,000, down 50,000 on the quarter, representing 13.4% of the youth population (down 0.7 percentage points).
  • Youth unemployment (including students) is 564,000, up 10,000 on the quarter.
  • There are 2.0 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise next month.
  • The employment rate is 74.8% (no change on last month’s published figure and up 0.2 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 14 June point to a strong and stable labour market, and jobs for the many and not the few with the employment rate at a historic high and the unemployment rate at a 40-year low. The downside is a continuation of the decline in real wages and so the living standards of hard working families.

Duncan Melville, Chief Economist at Learning and Work Institute, commented:

"David Gauke will be pleased to start his term as Secretary of State for Work and Pensions with today's numbers. Employment growth in the three months to February to April 2017 was again strong, exceeding 100,000. Unemployment and inactivity amongst people of working age both fell. Vacancies levels stabilised at a high level.

The quarterly workforce jobs figures for the first quarter of 2017 were also released today. They also point a healthy labour market with workforce jobs up by 225,000 compared to the last quarter of 2016. This increase was driven by a rise in employee jobs, up by 244,000, with the number of self-employed down slightly.

Welcome those these numbers are they, we also see a continuation of the other post great recession trend: declining real wages and living standards. Pay growth (excluding bonuses, a better underlying measure) moderated again to just 1.7% in the three months to April, six months before pay growth was a full percentage point higher. With inflation accelerating, this translates into a fall in real pay after accounting for inflation of 0.6% in the three months to April.

The absence of pay pressures is remarkable given the tightness of the labour market. It seems that we can look forward to further rises in employment and falls in unemployment before any inflationary pressures emerge in the labour market.

One fly in the ointment may be what is happening to the number of claimant unemployed. This is up by 26,600 in the year to May 2017. More recent trends appear more volatile and may well be affected by the difficulties ONS are having with the seasonal adjustment of the numbers consequent on the move from Jobseeker's Allowance to Universal Credit."

In this release, the Office for National Statistics has not reported the claimant count of unemployed Universal Credit and Jobseeker's Allowance claimants. The ONS continue to produce the figures, but do not include them in their report. We have included them in this analysis, but the reasons that led the ONS to withdraw them apply to our analysis as well.

However, we are not entirely confident that the very sharp rise in the claimant count shown over the last three months are genuine rises, or just a change in the way patterns of claims are reflected in the administrative data. We continue to estimate future unemployment and vacancies per unemployed person using these figures, but we recommend a higher than usual degree of caution.

Paul Bivand, Learning and Work AD for Statistics and Analysis said: "The new claims figures for Universal Credit (and to a lesser extent Jobseeker's Allowance) are particularly important as they are the first labour market figures to show the signs of any economic shocks. In the current climate of multiple sources of uncertainty affecting business and trade it is vital that we have clear sight of any large and unexpected changes. It is therefore unfortunate that we have large and annually repeated shifts in the claimant count due to these administrative changes."

The government agenda on full employment, skills reform, social justice and devolution is more uncertain than ever. But on the ground, reforms to the funding and delivery of employment programmes, health services, apprenticeships and skills have dramatically changed the environment in which we all work - and continue to be implemented while the new government's plans become clearer. So while the next few years will be times of uncertainty at home and abroad, they will also be defined by how we respond to the opportunities and challenges that we face. We will be discussing the challenges posed by labour market and other changes at the Into Work Convention in July 2017. We hope to see you there.

Employment rose by 109,000 between November to January 2017 and February to April 2017. In the last 12 months employment has grown by 372,000.

Unemployment fell by 50,000 between November to January 2017 and February to April 2017. and the unemployment rate fell 0.2 percentage points to 4.6% in the quarter the lowest level since 1975.

Economic inactivity fell by 30,000 between November to January 2017 and February to April 2017. and the inactivity rate fell 0.1 percentage points to 21.5% in the quarter, the same as last month and the lowest on record.

The small rise in the claimant count takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, fell by 10,400 in the month to May, compared to the adjusted rise of 7,300. Therefore, it should not be surprising that figures for local areas will show falls compared to the national picture.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 16.1%, it is now well below the level in early 2015 of 20%. The number of new claims has fallen. Jobseeker’s Allowance off-flow rates for JSA claimants of short durations increased. Off-flow rates remain at historically high levels.

Youth unemployment is showing a quarterly rise. There are 564,000 unemployed young people, and 366,000 (5.1% of the youth population) who are unemployed and not in full-time education.

The proportion of unemployed young people (not counting students) who are not claiming Jobseeker’s Allowance and therefore are not receiving official help with job search is now 56.1%.

A total of 86,000 were counted as in employment while on ‘government employment and training programmes’, where the Office for National Statistics continues to count Work Programme (etc.) participants as ‘in employment’ by default. This number fell 5,000 this quarter. Self-employment rose 3,000 this quarter. Employee numbers rose 127,000 in the quarter. Involuntary part-time employment fell this quarter by 39,000 to 1 million, 12.4% of all part-time workers.The proportion remains 5.0 percentage points above that in 2004.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,530,000. It has fallen by 10,000 from the figure published last month. On the basis of later claimant count figures, Learning and Work Institute estimates that unemployment may rise, although this depends on changes to the claimant count with Universal Credit rollout. The unemployment rate showed no monthly change at 4.6%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance

The proportion of unemployed people not claiming Jobseeker’s Allowance has fallen to 49.5%; (757,000). chart 2
Chart 3: Youth long-term unemployment (six months and over, 18-24)

Youth long-term unemployment (which can include students) has risen by 2,000 from last month’s figure and is now 150,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 20,700. The count fell by 600 this month. chart 3
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 299,000. The Jobseeker’s Allowance measure is 146,400.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 10.7% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.6%. For those aged 50 and over it is 2.9%. The quarterly change is down 0.2 for 18 to 24 year olds, down 0.2 for 25 to 49 year olds, and down 0.1 for the over-50s. chart 5
Chart 6: Young people not in employment, full-time education or training

The number of out of work young people who are not in full-time education (953,000) has fallen in the past quarter by 50,000 , or 5.0%. The fall was entirely among the inactive, with the number of unemployed young people not in full-time education or training being stable close to the lowest level since 1992 (the earliest figures). chart 6
Chart 7: Youth unemployment

The number of unemployed young people has risen by 1,000 since last month’s figures, to 564,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 1,037, to 165,809. There are 205,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance, 56.1% of all unemployed young people who are not students. chart 7
Chart 8: Jobseeker’s Allowance – claimant count

The Jobseeker’s Allowance and Universal Credit claimant Count rose by 26,600 over the year to May, taking the total to 802,600.

This series is having its seasonal adjustment reviewed as there remains a clear annual pattern after the old seasonal adjustment was applied. When this has been completed, the time series will be smoother. At this point we do not know whether the final figures will show rises, falls or remain stable.

In December 2016, the number of lone parents claiming Jobseeker’s Allowance was 65,210, 13.3% of JSA claimants. Lone parents with a youngest child aged five or over can only claim Jobseeker’s Allowance or, in UC Full Service Areas, UC, unless they have other reasons for claiming benefit. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 3,900 this month, to 92,400. Meanwhile the number of leavers also fell, by 1,200, to 94,900. These figures are affected by the rollout of Universal Credit to new groups of claimants, so falls are expected. chart 9
Chart 10: Jobseeker’s Allowance – claimant count leavers rate – leavers as percentage of ‘could leave’

Learning and Work Institute estimates that the ‘leavers rate’ – people who have left the claimant count as a proportion of those who could leave it – has fallen to 16.1% continuing the trend of recent months. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show an increase in staying on JSA for claimants at all lengths of unemployment except the shortest duration.

The proportion staying beyond three months has fallen slightly to 48.5%. Short-term claimants are mainly supported by Jobcentre Plus, although some will continue to be Work Programme participants who have not sustained jobs. chart 11
Chart 12: Jobseeker’s Allowance – proportion of starters in month becoming longer-term unemployed

The proportion of starters becoming 12-month claimants is now 10.6%. This is likely to rise over the next few months as the proportion of starters becoming 9-month claimants has risen by 1.5 percentage points over the last three months.

These figures are based on those in Chart 11, but show the patterns of the same people passing through successive quarterly thresholds. chart 12
Chart 13: Vacancies – whole economy survey

Vacancies (in the Office for National Statistics survey of the whole economy) fell this month, to a still high 770,000. As the number of vacancies is quite volatile, and frequently revised, the Office for National Statistics uses a three-month average. chart 13
Chart 14: Unemployed people per vacancy

There are 2.0 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise slightly next month. chart 14
Chart 15: UK employment

Employment rose by 7,000 on the figure published last month, to 31,954,000. chart 15
Chart 16: Employment rate in the UK

The employment rate rose by 0.2 percentage points over the quarter, to 74.8%. The small monthly fall visible in the chart is rounded to no change in the published figures. chart 16
Chart 17: Claimants for inactive benefits and the economically inactive – inactivity benefits

The number of people inactive owing to long-term sickness fell, as did the benefit figure. The fall in the benefit figures shows ‘early estimates’ of benefit numbers.

This chart shows claimants of Employment and Support Allowance, and Incapacity Benefit (the orange dots), compared with survey figures for the economically inactive owing to long-term sickness. chart 17
Chart 18: Claimants for inactive benefits and the economically inactive – lone parents

The survey figures (showing those looking after family) fell while benefit measures also fell. The number of those economically inactive while looking after family is the lowest on record.

Income Support estimates have decreased, and those for Jobseeker’s Allowance are now falling. Lone parents with a youngest child aged five or six have moved on to Jobseeker’s Allowance as part of welfare reform.

This chart shows claimants of Income Support as lone parents, plus lone parents claiming Jobseeker’s Allowance (the orange dots) and survey figures for all those who are economically inactive looking after family (including couple families). chart 18
Chart 19: Employment rate quarterly change in regions – February to April 2017

This quarter, 7 regions showed a rise in the employment rate, led by the North East and Eastern England. The employment rate fell in 5 regions, led by Northern Ireland and the East Midlands. chart 19
Chart 20: Unemployment rate quarterly change in regions – February to April 2017

8 regions showed an improvement in the unemployment rate this quarter. 4 showed a worsening. The rises were led by Wales and the West Midlands. chart 20
Chart 21: Inactivity rate quarterly change in regions – February to April 2017

Overall, there was a quarterly 0.1 percentage point fall in the inactivity rate to 21.5%, the lowest on record. 4 regions showed rises in inactivity, led by the East Midlands and Northern Ireland. chart 21

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