Making learning and work count

Labour market LIVE from Learning and Work Institute
16 November 2016

  • Unemployment is 1,604,000, down 52,000 from last month’s published figure (quarterly headline down 37,000) and the unemployment rate is 4.8%, down 0.1 percentage points on last month and down 0.1 percentage points on last quarter.
  • The number of claimant unemployed is 803,300, up 9,800 on last month, and the claimant rate is 2.3%.
  • The number of workless young people (not in employment, full-time education or training) is 1,022,000, up 1,000 on the quarter, representing 14.2% of the youth population (up 0.1 percentage points).
  • Youth unemployment (including students) is 591,000, down 36,000 on the quarter.
  • There are 2.1 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise next month.
  • The employment rate is 74.5% (no change on last month’s published figure and no change on the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 16 November are another worrying set of numbers. Unemployment is down, but employment growth is decelerating and working age inactivity is up.

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

"The focus of today's headlines may be on the fall in unemployment to an 11 year low, but looking a little deeper into today's figures reveals a rather more concerning picture.

Quarterly employment growth has slowed again and between July and September was running at a third of the level seen in the spring and early summer. Looking at the data on flows in and out of employment shows that this is being driven by falling levels of hiring by employers, which have been declining since late 2015, rather than more people leaving employment.

The current Brexit related economic uncertainty is likely to be a continuing negative influence on employers' willingness to hire new staff. Today also saw the release of near flat flash estimates for productivity growth in the third quarter of 2016. Combining this with weak employment growth going forward points to an outlook of low UK economic growth.

Inactivity amongst people of working age rose in the quarter, the first rise for 15 months. This rise in inactivity could be a statistical blip, and we will be monitoring these numbers closely in the coming months as they could indicate that increasing numbers of people are moving further away from employment. The claimant count also rose by nearly 10,000 in October and has been on a rising trends since February and risen by 67,000 since then.

This worrying state of affairs also affects young people. While youth unemployment in the quarter is down, inactivity amongst young people is up and overall the number of young out of employment is up. Learning and Work's Youth Employment Convention coming up in December will examine employment prospects for young people in detail. Young people moving into the labour market are always likely to be the first affected by such changes, particularly as the changes are in hiring of new workers."

The claimant count figures in this report include for the first time claimants of Universal Credit in the full (digital) service. This means that figures for some areas have been extensively revised upwards. However, the figures include all Universal Credit claimants with full jobsearch requirements (which may include some in mini-jobs). JSA figures included some very low hour part-time workers, but JSA discouraged this practice while Universal Credit encourages it.

Employment rose by 49,000 between April to June 2016 and July to September 2016. In the last 12 months employment has grown by 461,000.

Unemployment fell by 37,000 between April to June 2016 and July to September 2016 and the unemployment rate fell 0.1 percentage points to 4.8% in the quarter the lowest level since 2005.

Economic inactivity rose by 49,000 between April to June 2016 and July to September 2016 and the inactivity rate rose 0.1 percentage points to 21.7% in the quarter.

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 2,500 in the month to October, compared to the adjusted rise of 9,800. 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 risen. However, at 16.8%, it is still well below the level in early 2015 of 20.7%. 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.

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 56.6% and has risen by more than 20 percentage points since October 2012.

A total of 65,000 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 18,000 this quarter. Self-employment fell 3,000 this quarter. Employee numbers rose 63,000 in the quarter.

Involuntary part-time employment fell this quarter by 6,000 to 1.1 million, 13.6% of all part-time workers. this proportion is 1.8 times that in 2004.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,604,000. It has fallen by 52,000 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 remains highly uncertain. The unemployment rate fell by 0.1 percentage points to 4.8%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance or Universal Credit

The proportion of unemployed people not claiming Jobseeker’s Allowance or Universal Credit has fallen to 50.9%; (816,000).

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. The proportion remains at a historically high level. 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 7,000 from last month’s figure and is now 168,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 28,900. The count fell by 1,300 this month. Work Programme participants are included within the count unless they are in paid work. Youth benefit claimants are very likely to be Universal Credit claimants rather than JSA. chart 3
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 332,000. The Jobseeker’s Allowance measure is 151,600.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 11.7% 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 0.1 percentage points for 18 to 24 year olds, no change for 25 to 49 year olds, and no change 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 (1,022,000) has risen in the past quarter by 1,000 , or 0.1%. The rise was largely among the inactive, with the number of unemployed young people not in full-time education or training now below 400,000 and the lowest since 2001. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has fallen by 34,000 since last month’s figures, to 591,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants rose last month by 6,501, to 181,197. There are 224,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance, 56.6% 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 9,800 in October, taking the total to 803,300. In September , the number of lone parents claiming Jobseeker’s Allowance was 67,675. 12.1% of JSA claimants and 8.9% of the JSA/UC claimant count. Lone parents with a youngest child aged five or over can only claim Jobseeker’s Allowance, unless they have other reasons for claiming benefit. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new (legacy) Jobseeker’s Allowance claims rose by 600 this month, to 99,500. Meanwhile the number of leavers fell, by 600, to 109,500. 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 risen to 16.8%. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show a fall in off-flow (rise in retention) for the shortest term claimants coupled with increases in off-flows for some of those claiming 6-12 months.

The proportion staying beyond three months has risen to 45.8%. 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 9.6%. This is likely to rise over the next few months as the proportion of starters becoming 9-month claimants has risen by 1.7 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) rose this month, to 757,000. 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 2.1 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise slightly next month (if unemployment follows the claimant count upwards). chart 14
Chart 15: UK employment

Employment fell by 12,000 on the figure published last month, to 31,799,000. chart 15
Chart 16: Employment rate in the UK

The employment rate showed no change over the quarter, at 74.5%. The change in the chart is within the rounding to the nearest 0.1 percentage point. 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) rose while benefit measures fell more sharply.

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 – July to September 2016

This quarter, 5 regions showed a rise in the employment rate, led by the West Midlands and Northern Ireland. The employment rate fell in 7 regions, led by the East of England and the South West. chart 19
Chart 20: Unemployment rate quarterly change in regions – July to September 2016

8 regions showed an improvement in the unemployment rate this quarter. 4 showed a worsening. The rises were led by the East of England and the North East. chart 20
Chart 21: Inactivity rate quarterly change in regions – July to September 2016

Overall, there was a 0.1 percentage point rise in the inactivity rate. 8 regions showed rises in inactivity, led by the North East and Scotland. chart 21

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