Making learning and work count

Labour market LIVE from Learning and Work Institute
19 October 2016

  • Unemployment is 1,656,000, up 24,000 from last month’s published figure (quarterly headline up 10,000) and the unemployment rate is 4.9%, no change on last month and no change on last quarter.
  • The number of claimant unemployed is 776,400, up 700 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 1,019,000, up 6,000 on the quarter, representing 14.2% of the youth population (up 0.1 percentage points).
  • Youth unemployment (including students) is 624,000, up 7,000 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 74.5% (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 19 October are worrying with a small rise in unemployment, but they could be just a blip.

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

"Today's figures show a rise in unemployment of 10,000 in the three months to June to August. In addition, the rise in employment over the same period was 106,000. This is a deceleration on the quarterly rises in employment we saw in the figures released in the three months July to September. It is too early to say whether or not these figures are the first signs of a softening in the labour market in the wake of the referendum vote to leave the EU. They could be just a blip. The figures for the December 2015-February 2016 three-month period showed a rise in unemployment which was both preceded by and followed by falling unemployment. Hence today's figures could be another blip.

The rise in youth unemployment, and in particular, long-term youth unemployment is a source of concern. It makes the Youth Employment Convention coming up in December particularly timely.

Our view remains that the vote for Brexit and Brexit itself will have adverse impacts on the UK economy and labour market. In a separate release, the Treasury today published its latest survey of independent economic forecasters. The consensus amongst independent forecasters is that by the end of 2017, the ILO unemployment rate is expected to rise to 5.4% which implies an increase in unemployment of around 150,000 compared to the numbers announced today. "

The claimant count figures in this report do not include claimants under the Universal Credit Full Service (the digital service). Between May and August this expanded to 16 extra Jobcentres and this rollout is evident in UC claim figures as the new claims that are shown (which can only be non-digital) drop towards zero in the relevant postcode areas. Therefore, the claimant count is being under-recorded.

Employment rose by 106,000 between March to May 2016 and June to August 2016. In the last 12 months employment has grown by 560,000.

Unemployment rose by 10,000 between March to May 2016 and June to August 2016, and the unemployment rate remained at 4.9% in the quarter, the lowest level since 2005.

Economic inactivity fell by 65,000 between March to May 2016 and June to August 2016, and the inactivity rate fell 0.1 percentage points to 21.5% in the quarter, a new record low.

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 10,200 in the month to September, compared to the adjusted rise of 700. 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 16.8%, it is now 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.

Youth unemployment is showing a quarterly rise, concentrated among the 18-24. Long-term youth unemployment has also ticked up, among those 6-12 months unemployed. There are 624,000 unemployed young people, and 414,000 (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 20 percentage points since October 2012.

A total of 67,000 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 27,000 this quarter. Self-employment rose 7,000 this quarter and returned to last quarter's record proportion of employment. Employee numbers rose 121,000 in the quarter. Involuntary part-time employment fell this quarter by 42,000 to 1.1 million, 13.5% of all part-time workers.The proportion remains nearly double that in 2004.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,656,000. It has risen by 24,000 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 remained rounded to 4.9%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance

The proportion of unemployed people not claiming Jobseeker’s Allowance or Universal Credit has risen to 53.6%, (888,000).

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 since early 2015 has fluctuated within a narrow range. 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 14,000 from last month’s figure and is now 175,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 30,200. The count fell by 500 this month. Work Programme participants are included within the count unless they are in paid work. Universal Credit statistics do not identify claimants who are long-term in the "searching for work" conditionality regime, i.e. the long-term unemployed. chart 3
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 337,000. The Jobseeker’s Allowance measure is 151,400. Universal Credit statistics do not identify claimants who are long-term in the "searching for work" conditionality regime, i.e. the long-term unemployed.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 12.1% 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 3.2%. The quarterly change is up 0.5 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 (1,019,000) has risen in the past quarter by 6,000 , or 0.6%. There was a 8,000 fall in the last month, but the two previous months had seen rises. This rise was entirely among the unemployed, with the number of inactive young people not in full-time education or training falling. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has risen by 3,000 since last month’s figures, to 624,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 1,481, to 171,191. There are 247,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance or UC, 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 rose by 700 in September, taking the total to 776,400. In June, the number of lone parents claiming Jobseeker’s Allowance was 68,090. 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. The claimant count is slightly understated as the increasing numbers of Universal Credit Full Service (digital) claimants are not included in the count. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 5,000 this month, to 98,500. Meanwhile the number of leavers also fell, by 4,500, to 110,500. There are as yet no figures for Universal Credit leavers from the ‘searching for work’ group (to any other destination). 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 16.8%. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

The proportion staying beyond three months has fallen to 43.9%. Short-term claimants (where remaining on benefits is falling - or off-flows rising) are mainly supported by Jobcentre Plus, although some will be Work Programme participants who have not sustained jobs. Off-flow rates for longer-term claimants are more stable. 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 9.7%. This is likely to rise over the next few months as the proportion of starters becoming 9-month claimants has risen by 1.2 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 749,000. 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, as the claimant count has been rising. chart 14
Chart 15: UK employment

Employment rose by 43,000 on the figure published last month, to 31,811,000. chart 15
Chart 16: Employment rate in the UK

The employment rate rose by 0.1 percentage points over the quarter, to 74.5%, but has now been 74.5% in the monthly figures for three months. 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 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 – June to August 2016

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

5 regions showed an improvement in the unemployment rate this quarter. 7 showed a worsening. The rises were led by the East and London. chart 20
Chart 21: Inactivity rate quarterly change in regions – June to August 2016

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

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