Making learning and work count

Labour market LIVE from Learning and Work Institute
11 December 2018

  • Unemployment is 1,380,000, down by 1,000 from last month’s published figure (quarterly headline up by 20,000) and the unemployment rate 4.1%, no change on last month and up 0.1 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 992,600, which has risen by 21,900 on last month, and the claimant rate is 2.8%.
  • The number of workless young people (not in employment, full-time education or training) is 946,000, down 36,000 on the quarter, representing 13.5% of the youth population and fell by 0.5 percentage points.
  • Youth unemployment (including students) is 499,000, up by 10,000 on the quarter.
  • There are 1.6 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise next month.
  • The employment rate is 75.7% and has risen by 0.2 percentage points on last month’s published figure and is also up by 0.2 percentage points in the preferred quarterly measure.

Learning and Work Institute comment:

The labour market figures published on 11 December are surprisingly good news given the slowing labour market apparent in the numbers in recent months. However, claimant unemployment continues to rise, and it appears is likely to already be at one million. The figures for claimant unemployment this month will be announced in January.

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

‘Given continuing Brexit related economic uncertainty, today’s numbers are unexpectedly positive. Santa Claus has clearly visited the new DWP Secretary of State, Amber Rudd, early this year.

Employment was up substantially in the quarter, August to October 2018 compared to May to July 2018 (by 79,000). There is also very welcome news on economic inactivity among people of working age which fell by 95,000 in the same quarter. This contrasts with the substantial quarterly increases seen earlier in the year. This fall is largely driven by a decline in the number of people who are economically inactive due to long term sickness. Also, on a positive note, the percentage of people working part-time because they could not find a full-time job has dipped below 11% for the first time since the last quarter of 2008. One benefit of a stronger labour market is that more people can find the sort of working arrangements that they prefer.

ILO unemployment is up by 20,000 in the quarter, but down by 1,000 on the figures published last month. The claimant measure of unemployment increased substantially by 21,000 in the month to November 2018 and, extrapolating the rate of increase seen in the last year, appears likely to be already over one million - figures for December will be published next month. We have in recent months expressed concerns that the rising claimant count could reflect DWP being distracted by ongoing problems to do with the roll out of Universal Credit, and so is taking its eye off the ball with regard to supporting the unemployed back into work. However, the recent falls in inactivity raises a more positive possibility: that DWP are activating the economically inactive and moving them closer to entering work and these newly activated individuals are appearing in the claimant count numbers, which of these explanations is correct requires some deeper analysis.

Also positive is that annual wage growth increased again to 3.3% in October, this is the fastest rate of growth for nearly 10 years. After accounting for inflation, real wage growth was 1.1% which was the fastest rate of growth since December 2016.’

Employment has risen by 79,000 between May to July 2018 and August to October 2018. In the last 12 months employment rose by 396,000.

Unemployment rose by 20,000 between May to July 2018 and August to October 2018. and the unemployment rate rose by 0.1 percentage points to 4.1% in the quarter.

Economic inactivity has fallen by 95,000 between May to July 2018 and August to October 2018. and the inactivity rate is down by 0.2 percentage points to 21% in the quarter.

The national claimant count increased by 21,900. This takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, rose by 15,000 in the month to November. Therefore, it should not be surprising that figures for local areas will show smaller rates of increase than the national picture. However, this will vary substantially according to when Universal Credit rollout took place.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 13.3%, it is now well below the level in early 2015 of 17.1%. Jobseeker’s Allowance off-flow rates for JSA claimants fell.

Youth unemployment is showing a quarterly fall. There are still 499,000 unemployed young people, and 326,000 (4.7% 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 Universal Credit or Jobseeker’s Allowance and therefore are not receiving official help with job search is now 44.8%.

A total of 54,000 were counted as in employment while on ‘government employment and training programmes’, where the Office for National Statistics continues to count employment programme participants as ‘in employment’ by default. This number rose by 7,000 this quarter. Self-employment fell by 29,000 this quarter. The number of employees increased by 115,000 in the quarter. Involuntary part-time employment is down by 61,000 this quarter to 0.9 million, 10.8% of all part-time workers.The proportion remains much higher than the 7.4% in 2004.

Chart 1: UK unemployment (ILO)

The latest unemployment figure is 1,380,000. It has has fallen by 1,000 from the figure published last month. If it followed the later claimant count figures of Universal Credit and Jobseeker's Allowance, Learning and Work Institute estimates that unemployment may rise, although this remains highly uncertain. The unemployment rate remained at 4.1%. chart 1
Chart 2: Percentage unemployed not claiming Jobseeker’s Allowance

The proportion of unemployed people not claiming Jobseeker’s Allowance has fallen to 31.3% (433,000). 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 6,000 from last month’s figure and is now 133,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 19,700. The count fell by 200 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 278,000. The Jobseeker’s Allowance measure is 154,400.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 10.2% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.2%. For those aged 50 and over it is 2.7%. The quarterly change is up 0.2 for 18 to 24 year olds, no change for 25 to 49 year olds, and up 0.1 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 (946,000) has fallen in the past quarter by 36,000 (3.7%). The fall was among the inactive, with the number of unemployed young people not in full-time education or training rising by 4,000. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has risen by 23,000 since last month’s figures, to 499,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants rose last month by 4,585, to 189,617. There are 146,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance, 44.8% of all unemployed young people who are not students. chart 7
Chart 8: Jobseeker’s Allowance and Universal Credit claimant count

The ONS headline Jobseeker’s Allowance and Universal Credit claimant count increased by 21,900 in November, taking the total to 992,600. ONS' claimant count before seasonal adjustment increased by 15,000 to 964,500. This unadjusted change is directly comparable to the local level claimant count changes published today.

L&W's seasonally adjusted estimate rose by 22,100 to 994,800. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 7,000 this month, to 34,900. Meanwhile the number of leavers also fell, by 3,700, to 55,500. The rollout of Universal Credit affects these figures. Now, 63% of claims in the Claimant Count are Universal Credit. UC passed the total of JSA claims in June 2018. 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 13.3% continuing several months of falls.. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show a increase in benefit off-flow for claimants at most lengths of unemployment, but the proportion staying beyond three months has risen to 51.2%. 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 14.9%. This is likely to fall over the next few months as the proportion of starters becoming 9-month claimants has fallen 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) were almost flat this month, at 848,000. 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 1.6 unemployed people per vacancy. L&W estimates this figure may rise next month, if unemployment numbers follow the claimant count up. chart 14
Chart 15: UK employment

Employment increased by 67,000 on the figure published last month, to 32,476,000. chart 15
Chart 16: Employment rate in the UK

The employment rate has risen by 0.2 percentage points over the quarter, to 75.7%. 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.

This chart shows claimants of Employment and Support Allowance, and Universal Credit due to incapacity (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.

Lone parents are increasingly claiming Universal Credit as Full Service rolls, out, but compatible figures to Income Support or JSA are not available. DWP has now ceased publishing statistics on lone parent JSA claimants.

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 – August to October 2018

This quarter, 7 regions showed a rise in the employment rate, led by the North West and the East Midlands. The employment rate fell in 5 regions, led by the West Midlands and Northern Ireland. chart 19
Chart 20: Unemployment rate quarterly change in regions – August to October 2018

6 regions showed an improvement in the unemployment rate this quarter. 6 showed a worsening. The rises were led by the North East and the West Midlands. chart 20
Chart 21: Inactivity rate quarterly change in regions – August to October 2018

Overall, there was a 0.2 percentage point fall in the inactivity rate. 6 regions showed rises in inactivity, led by Northern Ireland and the West Midlands. Northern Ireland's inactivity rate remains much higher than any other region, 7.5 percentage points above the UK and 4.2 points above the next region, the North East of England. chart 21

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