Making learning and work count

Labour market LIVE from Learning and Work Institute
12 July 2017

  • Unemployment is 1,495,000, has fallen by 36,000 from last month’s published figure (quarterly headline down by 64,000) and the unemployment rate is 4.5%, down 0.1 percentage points on last month and down 0.2 percentage points on last quarter.
  • The number of claimant unemployed is 829,000, up 6,000 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 965,000, down 14,000 on the quarter, representing 13.6% of the youth population (down 0.1 percentage points).
  • Youth unemployment (including students) is 562,000, up 4,000 on the quarter.
  • There are 1.9 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise slightly next month.
  • The employment rate is 74.9% (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 12 July are encouraging for individuals' job prospects with a strong increase in employment, and unemployment and economic inactivity amongst people of working age falling. However, people in work are getting poorer with real wages continuing to fall.

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

"Employment growth in the three months from March to May 2017 strengthened further on previous months and reached 175,000. Unemployment and levels of inactivity amongst people of working age both fell. The working age employment and inactivity rates reached a record high and low respectively, and the unemployment rate fell to 4.5%, the lowest level since 1975. Despite the current uncertain economic and political climate, the overall labour market is performing strongly.

The ONS have this month revised its seasonal adjustment of the claimant count. In contrast, with the above survey based numbers these new numbers show a notable increase in claimant unemployment of just under 50,000 in the four months to June 2017. The latest month here is later than any month counted for the survey estimates. Although on a quick look we continue to have some concerns about the precise patterns shown by these seasonally adjusted numbers they do look far more plausible than the previous set of numbers. Hence, these claimant count numbers may either be a herald of worse numbers to come in future months or indicate a disconnect between the strong performance of the labour market and trends for claimant unemployment. We have suggested that DWP focus on their support for JSA and UC unemployed claimants may be being distracted by the roll out of Universal Credit.

Annual wage growth has picked up slightly to reach 2.0% in the three months March to May 2017. However, this increase has not been sufficient to offset rising inflation and real wages fell for the third month running. The absence of pay pressures despite the tight labour market will add support to those on the Bank of England's Monetary Policy Committee arguing against raising interest rates.

The above combination of high employment but declining real pay points to the need to focus on the quality of work as well as the quantity. That is the focus of the Taylor Review published yesterday and the Learning and Work Institute has published a number of responses to this which will be added to over the next few days."

Employment rose by 175,000 between December 2016 to February 2017 and March to May 2017. In the last 12 months employment has grown by 324,000.

Unemployment fell by 64,000 between December 2016 to February 2017 and March to May 2017 and the unemployment rate fell 0.2 percentage points to 4.5% in the quarter the lowest level since 1975.

Economic inactivity fell by 57,000 between December 2016 to February 2017 and March to May 2017 and the inactivity rate fell 0.1 percentage points to 21.5% in the quarter, a new record low.

The 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 11,500 in the month to June, compared to the adjusted rise of 6,000. 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%, it is now well below the level in early 2015 of 19%. The number of new claims has fallen. Jobseeker’s Allowance off-flow rates for JSA claimants of longer durations increased. Off-flow rates remain at historically high levels.

Youth unemployment is showing a quarterly fall. There are still 562,000 unemployed young people, and 365,000 (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 or Universal Credit and therefore are not receiving official help with job search is now 55.3%.

A total of 72,000 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 21,000 this quarter. Self-employment rose 13,000 this quarter. Employee numbers rose 189,000 in the quarter. Involuntary part-time employment fell this quarter by 27,000 to 1 million, 12.1% of all part-time workers. The proportion remains nearly double that in 2004.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,495,000. It has fallen by 36,000 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 0.1 percentage points since last month to 4.5%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance

The proportion of unemployed people not claiming Jobseeker’s Allowance has fallen to 45.4%; (679,000). 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 11,000 from last month’s figure and is now 161,000.

The youth long-term Jobseeker’s Allowance count (but UC is not included as UC duration does not measure the period unemployed) is far behind, at 20,500. The count fell by 300 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 292,000. The Jobseeker’s Allowance measure is 147,600.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 11.0% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.4%. For those aged 50 and over it is 2.8%. The quarterly change is up 0.2 for 18 to 24 year olds, down 0.3 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 (965,000) has fallen in the past quarter by 14,000 , or 1.4%. Three out of every five out of work young people not in full-time education are economically inactive rather than unemployed. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has fallen by 2,000 since last month’s figures, to 562,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants rose last month by 710, to 163,930. There are 202,000 unemployed young people who are not in education, and do not claim UC or Jobseeker’s Allowance, 55.3% 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 rose by 6,000 in June, taking the total to 829,000. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 1,700 this month, to 90,400. Meanwhile the number of leavers also fell, by 1,000, to 94,300.

These figures are affected by the continued roll-out of Universal Credit. chart 9
Chart 10: Jobseeker’s Allowance 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 fallen to 16.0%. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

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

The proportion staying beyond three months has fallen to 48.0%. 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 10.8%. This is likely to rise over the next few months as the proportion of starters becoming 9-month claimants has risen by 1.4 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 slightly this month, to 774,000. 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 1.9 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 56,000 on the figure published last month, to 32,010,000. chart 15
Chart 16: Employment rate in the UK

The employment rate rose by 0.3 percentage points over the quarter, to 74.9%.

chart 16
Chart 17: Claimants for inactive benefits and the economically inactive – inactivity benefits

The number of people inactive owing to long-term sickness rose. DWP has stopped updating their ‘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. DWP has stopped updating their ‘early estimates’ of benefit numbers.

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 – March to May 2017

This quarter, 8 regions showed a rise in the employment rate, led by the North East and London. The employment rate fell in 4 regions, led by Wales and the East Midlands. chart 19
Chart 20: Unemployment rate quarterly change in regions – March to May 2017

9 regions showed an improvement in the unemployment rate this quarter. 3 showed a worsening. The rises were led by the West Midlands and Northern Ireland. chart 20
Chart 21: Inactivity rate quarterly change in regions – March to May 2017

Overall, there was a 0.2 percentage point fall in the inactivity rate. 4 regions showed rises in inactivity, led by the East Midlands and Wales. chart 21

This newsletter is produced by Learning and Work Institute and keeps readers up to date on a wide range of learning and work issues.

If you have any questions, contact Paul Bivand
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