Making learning and work count

Labour market LIVE from Learning and Work Institute
17 August 2016

  • Unemployment is 1,641,000, down 5,000 from last month’s published figure (quarterly headline down 52,000) and the unemployment rate is 4.9%, no change on last month and down 0.2 percentage points on last quarter.
  • The number of claimant unemployed is 763,600, down 8,600 on last month, and the claimant rate is 2.2%.
  • The number of workless young people (not in employment, full-time education or training) is 1,021,000, down 15,000 on the quarter, representing 14.2% of the youth population (down 0.2 percentage points).
  • Youth unemployment (including students) is 626,000, down 5,000 on the quarter.
  • There are 2.2 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise slightly next month.
  • The employment rate is 74.5% (up 0.1 percentage points on last month’s published figure and up 0.3 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 17 August are another encouraging set of numbers, with employment again rising substantially and unemployment falling.

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

"Employment rose by around 170,000 in the three months to April to June 2016. This is a similar outcome compared to the figures released in July, but a far bigger increase than we saw before that in 2016. Unemployment fell by over 50,000 in the same period, again similar to last month's figures. It is important to note that today's figures relate to April to June 2016, a period which, bar around a week, was before the EU referendum vote on 23 June. Hence, they indicate that the labour market performed positively in the second quarter of this year, but do not tell us anything about the labour market impact of the vote for Brexit.

There is currently only limited data available for the post-referendum period. For July, today's release only provides figures for vacancies and claimant unemployment. These provide a mixed picture with vacancies down again, continuing the trend since late 2015, but with claimant unemployment falling after four months of rising numbers.

We continue to expect the vote for Brexit and Brexit itself will have sizeable negative impacts on the UK economy and labour market. Today also saw the release of the August edition of the Treasury's survey of independent forecasters with forecasts through to 2020. The consensus amongst independent forecasters that emerges is that economic growth is expected to remain muted between now and 2020 and not reach 2 per cent per annum. In line with this, the consensus is that by the end of 2018 ILO unemployment is expected to be around 350,000 higher than it is now and reach levels of around 2 million. As we have argued such a rise in unemployment can at least be mitigated by prompt action of a package of employment measures in the Autumn Statement.

This increase in unemployment is not inevitable and can be addressed. As we argued yesterday, prompt and well-designed 'active labour market policies' can reduce unemployment, and we urge significant action in this regard to be taken in this year's Autumn Statement."

Employment rose by 172,000 between January to March 2016 and April to June 2016. In the last 12 months employment has grown by 606,000.

Unemployment fell by 52,000 between January to March 2016 and April to June 2016 and the unemployment rate fell 0.2 percentage points to 4.9% in the quarter the lowest level since 2005.

DWP have separately released Universal Credit figures up to 4 August 2016. They report that the number of new claims made remains high, but (at a weekly average of 14,201) are lower than the weekly peak of 15,201 new claims in the week ending 30 June 2016. However, the roll-out of the UC Full (digital) service is taking people out of the figures. Areas with 1781 new UC claims in the 4 weeks to July 7 are reporting zero new claims in the 4 weeks to August 4, many due to the digital roll-out. Claims on the Full (digital) Service are not included in statistical releases and therefore are not in the published claimant count.

The fall 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 4,900 between June and July, compared to the adjusted fall of 8,600. Therefore, it should not be surprising that figures for local areas will show smaller falls compared to the national picture.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 17.4%, it is now well below the level in early 2015 of 20.7%. The number of JSA new claims has fallen as Universal Credit claims rise. Jobseeker’s Allowance off-flow rates for JSA claimants show a mixed picture - for under 6 months and 15-18 month claimants off-flows rose, while for 9 to 15 month claimants they fell. Off-flow rates remain at historically high levels.

Youth unemployment is showing a quarterly fall. There are still 626,000 unemployed young people, and 418,000 (5.8% 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 59.7% and has risen by more than 30 percentage points since October 2012.

A total of 83,000 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 15,000 this quarter. Self-employment rose 94,000 this quarter to 15.1% of employment. Employee numbers rose 73,000 in the quarter. Involuntary part-time employment fell this quarter by 41,000 to 1.2 million, 13.8% of all part-time workers.This is the lowest proportion since December 2009.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,641,000. It has fallen by 5,000 from the figure published last month. On the basis of later claimant count figures, Learning and Work Institute estimates that unemployment may continue to decrease, although this remains highly uncertain. The unemployment rate stayed at 4.9%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance

The proportion of unemployed people not claiming Jobseeker’s Allowance has fallen to 53%; (869,000).

The number and proportion of unemployed people not claiming Jobseeker’s Allowance had risen since the new Jobseeker’s Allowance sanctions regime started in October 2012 and remains historically high. chart 2
Chart 3: Youth long-term unemployment (six months and over, 18-24)

Youth long-term unemployment (which can include students) has fallen by 1,000 from last month’s figure and is now 164,000.

The youth Jobseeker’s Allowance count remains far behind, at 31,300. The count fell by 1,000 this month. Work Programme participants are included within the count unless they are in paid work. There are no Universal Credit figures for long-term "searching for work" yet. chart 3
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 344,000. The claimant count measure is 152,600.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 11.8% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.7%. For those aged 50 and over it is 3.1%. The quarterly change is down 0.4 percentage points for 18 to 24 year olds, down 0.1 for 25 to 49 year olds, and down 0.3 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 (1,021,000) has fallen in the past quarter by 15,000 , or 1.4%. The fall was among the inactive, with the number of unemployed young people not in full-time education or training up by 4,000. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has risen by 9,000 since last month’s figures, to 626,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 800, to 166,000. There are 249,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance or Universal Credit, 59.7% 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 acount fell by 9,300 in July, taking the total to 763,400. In June, the number of lone parents claiming Jobseeker’s Allowance fell by 1,000 to 68,090, 12.6% of all JSA claimants. Lone parents with a youngest child aged five or over can only claim Jobseeker’s Allowance, unless they have other reasons for claiming benefit. They can only claim Universal Credit in a few areas. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 7,900 this month, to 103,600. Meanwhile the number of leavers also fell, by 5,100, to 119,900. The fall in new claims is at least partly to do with the rollout of Universal Credit. 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 17.4%. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show a mixed picture.For shorter term (and the longest term) there are decreases in retention (increase in off-flow) while for intermediate groups the picture is reversed.

The proportion staying beyond three months has fallen to 44.3%. Short-term claimants are mainly supported by Jobcentre Plus, although some will 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 9.0%, the highest for more than two years. This may continue to rise over the next few months because of the worsening of short-term flow rates in spring 2016.

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 741,000. 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 2.2 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 45,000 on the figure published last month, to 31,750,000. chart 15
Chart 16: Employment rate in the UK

The employment rate rose by 0.3 percentage points over the quarter, to 74.5%. 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 has the benefit figure. The benefit figures show ‘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 slowly.

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 – April to June 2016

This quarter, 9 regions showed a rise in the employment rate, led by the East Midlands and Scotland. The employment rate fell in 3 regions, led by the North West and Wales . chart 19
Chart 20: Unemployment rate quarterly change in regions – April to June 2016

10 regions showed an improvement in the unemployment rate this quarter. 2 showed a worsening. The rises were led by the West Midlands and London. chart 20
Chart 21: Inactivity rate quarterly change in regions – April to June 2016

Overall, there was a 0.1 percentage point fall in the inactivity rate. 4 regions showed rises in inactivity, led by the North West and Wales. chart 21

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