Making learning and work count

Labour market LIVE from Learning and Work Institute
15 June 2016

  • Unemployment is 1,671,000, down 22,000 from last month’s published figure (quarterly headline down 20,000) and the unemployment rate is 5%, down 0.1 percentage points on last month and down 0.1 percentage points on last quarter.
  • The number of claimant unemployed is 746,100, down 400 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 1,030,000, down 6,000 on the quarter, representing 14.3% of the youth population (no change on last quarter.
  • Youth unemployment (including students) is 621,000, down 11,000 on the quarter.
  • There are 2.2 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise next month.
  • The employment rate is 74.2% (no change on last month’s published figure and up 0.1 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 15 June suggest that the labour market remains resilient, but with more action needed to tackle long-term unemployment.

Stephen Evans, Deputy Chief Executive of Learning and Work Institute, commented:

The jobs market continues to sail on relatively serenely despite choppier waters in the global economy and ongoing uncertainty surrounding the forthcoming EU referendum.

The employment rate, at 74.2%, is the joint highest since comparable records began in 1971. Employment is up 461,000 on the year, putting the Government on track to meet its manifesto commitment to 2 million new jobs over the Parliament. The unemployment rate is 5% the lowest since 2005. And economic inactivity, while flat in recent months, is down on the year as more people enter the labour force to work and look for jobs.

Average earnings also grew, albeit relatively modestly, by 2% (2.3% excluding bonuses) in the last year. This may in part reflect the introduction of the National Living Wage in April (these figures are the first to include April), giving a welcome boost to earnings for the lowest paid.

Underpinning challenges

Digging below these headlines, there are a couple of areas where the picture is a bit more mixed. The first is employment across the UK. The employment rate grew fastest in Wales and the South East, but fell quite sharply in Scotland and a little in the East of England.

The second is long-term unemployment, where falls in recent years now seem to have levelled off. Indeed, since the turn of the year there are some signs that people may be staying longer on Jobseeker's Allowance. The proportion of JSA claimants leaving the benefit is also a little below 2014 and 2015 levels. It is not clear why this would be, but they are indicators to keep an eye on - long-term unemployment has a particularly damaging impact on people's job, pay and career prospects.

Relevant to the EU debate, the proportion of workers that are non-UK nationals rose from 3.5% in 1997 to 10.6% in 2016, which the ONS says is primarily the result of the expansion of the EU. It is important to be clear, however, that most studies show little or no impact on the employment opportunities of UK nationals (although studies on the effect on pay are a little more mixed). There is not a fixed number of jobs in the economy and the best way to increase employment, whatever the levels of migration, is to ensure the economy grows and increase the number of people looking for work and ready for work.

Trouble ahead?

Looking ahead, the two biggest uncertainties for the labour market are the EU Referendum and slowdowns in the UK and global economies. Since 2008, employment has been strong and real earnings growth weak. There is little to suggest that this pattern will change as a result of any downturn or shock in the economy.

However, if the Government is to deliver its manifesto commitment to increase employment and halve the disability employment gap, further action is needed. On current trends it would take almost 200 years to achieve this goal: we need better employment support for disabled people and more people to access employment support. It is important the Government's proposed Green Paper in the Autumn delivers this.

At present, the jobs market is a case of 'keep calm and carry on', but if we are to avoid trouble ahead we need more action to help those who've been out of work longest to look for and find work. That's true regardless of who wins next week's referendum.

Employment rose by 55,000 between November 2015 to January 2016 and February to April 2016. In the last 12 months employment has grown by 461,000.

Unemployment fell by 20,000 between November 2015 to January 2016 and February to April 2016 and the unemployment rate fell to 5.0% in the quarter the lowest level for 10 years.

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 20,000 between April and May, compared to the adjusted fall of 400. Therefore, it should not be surprising that figures for local areas will show larger falls compared to the national picture.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has risen. At 18.3%, it is now well below the level in early 2015 of 20.7%. The number of new claims has fallen as new claims are increasingly for Universal Credit. Jobseeker’s Allowance off-flow rates for JSA claimants of most durations reduced. Off-flow rates remain at historically high levels.

Youth unemployment is showing a quarterly fall. There are still 621,000 unemployed young people, and 405,000(5.6% 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 or UC and therefore are not receiving official help with job search is now 50.2%.

A total of 98,000 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 1,000 this quarter. Self-employment rose 42,000 this quarter and remains at a historically high proportion of employment. Employee numbers rose 4,000 in the quarter. Involuntary part-time employment fell this quarter by 21,000 to 1.2 million, 14.3% of all part-time workers.The proportion remains around double that in 2004.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,671,000. It has fallen by 22,000 from the figure published last month. On the basis of later claimant count figures, Learning and Work Institute estimates that unemployment may rise slightly, although this remains highly uncertain. The unemployment rate fell 0.1 percentage points to 5.0%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowanceor Universal Credit

The proportion of unemployed people not claiming Jobseeker’s Allowance is 55.7%; (931,000). This is down on last month but very 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 11,000 from last month’s figure and is now 170,000.

The youth Jobseeker’s Allowance and UC count remains far behind, at 32,700. The count fell by 700 this month. Work Programme participants are included within the count unless they are in paid work. chart 3
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 359,000. The claimant count measure is 155,200.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 11.9% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.8%. For those aged 50 and over it is 3.4%. The quarterly change is down 0.2 percentage points for 18 to 24 year olds, down 0.2 for 25 to 49 year olds, and down 0.2 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 (1,030,000) has fallen in the past quarter by 6,000 , or 0.63%. The fall was among the unemployed, with the number of inactive young people not in full-time education or training rising 2,000. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has fallen by 11,000 since last month’s figures, to 621,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 1,800, to 156,400. There are 158,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance or UC, 50.2% 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 400 in May, taking the total to 746,100. In March, there were 70,600 lone parents claiming Jobseeker’s Allowance. Lone parents with a youngest child aged five or over can only claim Jobseeker’s Allowance or, in some Universal Credit 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 1,900 this month, to 117,900. Meanwhile the number of leavers also fell, by 1,500, to 130,700. These figures are based on Jobseeker's Allowance without Universal Credit, as no leavers into work or other destination figures are published for UC. 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 Jobseeker's Allowance as a proportion of those who could leave it – has risen to 18.3%.
chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show the reduction in benefit off-flow for claimants at all lengths of unemployment, except the shortest term.

The proportion staying beyond three months has fallen to 45.5%, but this is still high by the pattern of the last two years. Off-flows are in the range seen in 2013, rather than the lower rates seen later on. 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 8.5%. This will rise over the next few months because of the worsening of off-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) rose slightly this month, to 749,000. These are, however, down on levels seein in Autumn 2015. 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 15,000 on the figure published last month, to 31,594,000. chart 15
Chart 16: Employment rate in the UK

The employment rate rose by 0.1 percentage points over the quarter, to 74.2%. chart 16
Chart 17: Claimants for inactive benefits and the economically inactive – inactivity benefits

The number of people inactive owing to long-term sickness is slowly rising, while the benefit figure is estimated to be falling. 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/line), 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 slowly.

Income Support estimates have decreased but are now flat, 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/line) 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 2016

This quarter, 8 regions showed a rise in the employment rate, led by Wales and the South East. The employment rate fell in 4 regions, led by Scotland and the East of England. chart 19
Chart 20: Unemployment rate quarterly change in regions – February to April 2016

5 regions showed an improvement in the unemployment rate this quarter. 7 showed a worsening. The rises were led by the South West and Scotland. chart 20
Chart 21: Inactivity rate quarterly change in regions – February to April 2016

Overall, there was a less than 0.5 percentage point fall in the inactivity rate. 4 regions showed rises in inactivity, led by Scotland and the East of England. chart 21

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