Labour Market Update from Learning and Work Institiute

Labour market LIVE from Learning and Work Institute
14 September 2016

• Unemployment is 1,632,000, down 9,000 from last month’s published figure (quarterly headline down 39,000) and the unemployment rate is 4.9%, no change on last month and down 0.1 percentage points on last quarter.
• The number of claimant unemployed is 771,000, up 2,400 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 1,029,000, down 1,000 on the quarter, representing 14.3% of the youth population (no change on last quarter).
• Youth unemployment (including students) is 621,000, up 1,000 on the quarter.
• There are 2.2 unemployed people per vacancy. Learning and Work Institute estimates this figure may fall further next month.
• The employment rate is 74.5% (up 0.1 percentage points on last month’s published figure, alhough this rise is obscured by rounding, up 0.3 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 14 September are again positive with employment rising substantially and unemployment falling.

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

“Employment rose by around 175,000 in the three months from May to July 2016. This is the third month in a row that we have seen quarterly employment increases around this level. These are far bigger increases than we saw in early 2016.

Unemployment fell by around 40,000 in the same period, slightly down on the figures for the previous two months. However, this is balanced by a slightly larger fall in economic inactivity amongst people of working age this month.

These are the first set of labour market figures that cover a period, the month of July, which is after the EU referendum result. As yet the figures do not appear to show any labour market impact from the decision to exit the EU. However, we are not out of the woods yet. The impact of the referendum decision was always likely to be felt over a rather longer period than the immediate period after the vote.

We continue to expect the vote for Brexit, and Brexit itself, will have substantial and deleterious impacts on the UK economy and labour market. The consensus amongst independent economic forecasters 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.”

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 recorded new claims drop towards zero in the relevant postcode areas. Therefore, there is an undercount in the claimant count.

Employment rose by 174,000 between February to April 2016 and May to July 2016. In the last 12 months employment has grown by 559,000.

Unemployment fell by 39,000 between February to April 2016 and May to July 2016 and the unemployment rate fell 0.1 percentage points to 4.9% in the quarter the lowest level since 2005.

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, rose by 4,000 between July and August, compared to the adjusted rise of 2,400. Therefore, it should not be surprising that figures for local areas will show larger rises compared to the national picture.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 17.2%, 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 fall. There are still 621,000 unemployed young people, and 412,000 (5.7% 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 59.5% and has risen by more than 20 percentage points since October 2012.

A total of 81,000 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 17,000 this quarter. Self-employment rose 59,000 this quarter. Employee numbers rose 128,000 in the quarter. Involuntary part-time employment fell this quarter by 36,000 to 1.2 million, 13.8% of all part-time workers. The proportion remains nearly double that in 2004.

The latest unemployment figure is 1,632,000. It has fallen by 9,000 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 next month, although this remains highly uncertain. The unemployment rate did not change, at 4.9%.

The proportion of unemployed people not claiming Jobseeker’s Allowance has fallen to 52.7%; (860,000).

The number and proportion of unemployed people not claiming Jobseeker’s Allowance had risen since the Jobseeker’s Allowance sanctions regime changed in October 2012.

Youth long-term unemployment (which can include students) has fallen by 4,000 from last month’s figure and is now 161,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 30,500. The count fell by 800 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.

Adult long-term unemployment on the survey measure is now 343,000. The Jobseeker’s Allowance measure is 151,600.

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 3.2%. The quarterly change is down 0.1 for 18 to 24 year olds, down 0.1 for 25 to 49 year olds, and down 0.2 for the over-50s.

The number of out of work young people who are not in full-time education (1,029,000) has fallen in the past quarter by 1,000 , or 0.1%. The fall was largely among the inactive, with the number of unemployed young people not in full-time education or training rising slightly.

The number of unemployed young people has risen by 5,000 since last month’s figures, to 621,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants rose last month by 2,400, to 169,200. There are 245,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance or UC, 59.5% of all unemployed young people who are not students.

The Jobseeker’s Allowance and Universal Credit claimant acount rose by 2,400 in August, taking the total to 771,000. In June, the number of lone parents claiming Jobseeker’s Allowance was 68,090. 12.6% of JSA claimants and 8.8% 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.

The number of new Jobseeker’s Allowance claims rose by 900 this month, to 104,500. Meanwhile the number of leavers fell, by 3,600, to 115,900.There are as yet no figures for Universal Credit leavers from the ‘searching for work’ group (to any other destination).

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 17.2%.

These measures show a mix of increases and decreases in out-flow for claimants at different lengths of unemployment.

The proportion staying beyond three months has fallen to 43.9%. Short-term claimants are mainly supported by Jobcentre Plus, although some will be Work Programme participants who have not sustained jobs.

The proportion of starters becoming 12-month claimants is now 9.5%. This may fall over the next few months because short-term off-flow rates increased in winter 2015-6 and so fewer will flow through to longer durations.

These figures are based on those in Chart 11, but show the patterns of the same people passing through successive quarterly thresholds.

Vacancies (in the Office for National Statistics survey of the whole economy) rose slightly this month, to 752,000. As the number of vacancies is quite volatile, and frequently revised, the Office for National Statistics uses a three-month average.

There are 2.2 unemployed people per vacancy. Learning and Work Institute estimates this figure may fall slightly next month.

Employment rose by 18,000 on the figure published last month, to 31,767,000.

The employment rate rose by 0.3 percentage points over the quarter, to 74.5%.

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.

The survey figures (showing those looking after family) were steady while benefit measures fell slowly.

Income Support estimates have decreased, and those for Jobseeker’s Allowance are 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).

This quarter, 11 regions showed a rise in the employment rate, led by Wales and Scotland. The employment rate fell in one region, Northern Ireland .

6 regions showed an improvement in the unemployment rate this quarter. 6 showed a worsening. The rises were led by the West Midlands and the North East.

Overall, there was a 0.2 percentage point fall in the inactivity rate. 3 regions showed rises in inactivity, led by Northern Ireland and the South East.