Making learning and work count

Labour market LIVE from Learning and Work Institute
16 October 2018

  • Unemployment is 1,363,000, up by 2,000 from last month’s published figure (quarterly headline down by 47,000) and the unemployment rate is 4.0%, no change on last month and reduced by 0.1 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 942,900, and rose by 18,500 on last month. The claimant rate is 2.6%.
  • The number of workless young people (not in employment, full-time education or training) is 960,000, and has fallen by 43,000 on the quarter, now representing 13.7% of the youth population (down by 0.6 percentage points).
  • Youth unemployment (including students) is 464,000. It fell by 60,000 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 75.5% and (was stable at the same as last month and down by 0.1 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 16 October suggest an unwelcome outlook for the UK labour market as we head towards Brexit. Claimant unemployment is on course to hit 1 million by the time we exit the EU in March 2019. .

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

‘We expect that the coming months will see a turn in the labour market with employment falling and unemployment rising as we head out of the EU.

The level of unemployment fell in the quarter to June - August 2018, the seventh consecutive quarterly fall in a row, but before you get too excited by this apparent good news consider some other facts.

Unemployment has been around 1.36 million since the April - June quarter, so it appears that unemployment has stopped falling. Even the quarterly fall recorded today has occurred not because of rising employment, which fell by 5,000 in quarter, but because economic inactivity is rising amongst people of working age.

Inactivity is up by more than 100,000 in the quarter for the second month in a row.

It appears that, so far, the slowing labour market is showing up not in the more politically visible rising unemployment but in rising inactivity and withdrawal from the labour market. This is a bad both for the individuals involved and for the economy. It would be better if individuals were staying in contact with the labour market both as a source of labour for employers wanting to recruit and the flip side of this: to enable individuals to move into work more quickly.’

Consistent with this gloomy reading of the situation in the labour market, claimant unemployment is up strongly both in the month to September, by 18,500, and in the year to September, by 138,300, which illustrates that rising claimant unemployment has been an issue for some time. If the rate of increase seen over the last year continues, then claimant unemployment will hit 1 million in March 2019, just in time for an unpleasant coincidence with a possibly disorderly no deal Brexit.

Vacancy levels remain high but have been stable at around 830,000 for the last four months.

While wage growth at 3.1% is the highest since January 2009, this just emphasises what a poor decade it has been for wage growth and so living standards in the last decade of the Great Recession and the subsequent muted economic recovery.

The current economic situation for UK employers is highly uncertain given the heightening risks of a no deal Brexit, compounded by wider factors bearing down on the world economy, notably the risks of rising protectionism and trade wars following the recent actions of President Trump and the retaliatory actions taken by, amongst others, China and the EU. There is already evidence that UK business is becoming more cautious in its decision making with regards to employment and business investment. The level of employment has been flat at close to 32.4 million since the February to April quarter.

Paul Bivand, Learning and Work Institute's associate director for statistics and analysis said:

"The claimant count of unemployed benefit claimants rose sharply again this month, while survey unemployment was flat. If the rise was just due to Universal Credit counting as unemployed people the old benefits counted as inactive, such as people signed off work by a doctor and who are ineligible for employer sick pay, then we would expect the rise to be a step-change, stopping when the roll-out for new claimants completed. There is no sign yet of that."

Employment has fallen by 5,000 between March to May 2018 and June to August 2018. In the last 12 months employment has risen by 289,000.

Unemployment fell by 47,000 between March to May 2018 and June to August 2018. and the unemployment rate decreased by 0.2 percentage points to 4.0% in the quarter the lowest level since 1975.

Economic inactivity rose by 103,000 between March to May 2018 and June to August 2018. and the inactivity rate rose by 0.2 percentage points to 21.2% in the quarter.

The national claimant count rose by 18,500. This takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, is up by 12,000 in the month to September. Therefore, it should not be surprising that figures for local areas will show smaller rises compared to the national picture, and vary a lot by area depending when Universal Credit full service was implemented in their area.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 14.3%, it is now well below the level in early 2015 of 17.1%. Jobseeker’s Allowance off-flow rates for JSA claimants rose.

Youth unemployment is showing a quarterly fall. There are still 464,000 unemployed young people, and 302,000 (4.3% 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 down and is now 41.8%.

A total of 45,000 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 is down by 8,000 this quarter. Self-employment reduced by 29,000 this quarter. The number of employees rose by 32,000 in the quarter. Involuntary part-time employment fell by 47,000 this quarter to 0.9 million, 11.3% 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 1,363,000. It rose by 3,000 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 remained at 4.0%. chart 1
Chart 2: Percentage unemployed not claiming Universal Credit or Jobseeker’s Allowance

The proportion of unemployed people not claiming Universal Credit or Jobseeker’s Allowance has fallen to 33.2%; (453,000). 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 8,000 from last month’s figure and is now 125,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 18,900. The count fell by 500 this month as Universal Credit roll-out reduces the JSA population. chart 3
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 283,000. The Jobseeker’s Allowance measure is 152,300.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 9.6% 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 2.9%. The quarterly change is down 1.0 for 18 to 24 year olds, up 0.1 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 (960,000) has fallen in the past quarter by 43,000 , or 4.3%. The fall was entirely among the unemployed, with the number of economically inactive young people not in full-time education or training increasing. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has fallen by 24,000 since last month’s figures, to 464,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants rose last month by 1,350, to 177,400. There are 126,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance, 41.8% 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 rose by 18,500 in September, taking the total to 942,900. ONS' claimant count before seasonal adjustment is up by 12,000 to 932,800. This unadjusted national change is directly comparable to the local level claimant count changes published today.

Learning and Work Institute's seasonally adjusted estimate increased by 19,300 to 947,700. chart 8
Chart 9: Jobseeker’s Allowance only – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 2,700 this month, to 49,600. This does not include Universal Credit new claims (or leavers). Meanwhile the number of JSA leavers also fell, by 3,400, to 65,600. The rollout of Universal Credit affects these figures. Now, 58% 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 14.3% after several months of rises. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show an increase in off-flow rates for claimants at all lengths of unemployment.

The proportion staying beyond three months has fallen to 47.9%. 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 14.5%. This is likely to rise over the next few months as the proportion of starters becoming 9-month claimants has risen by 0.5 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 832,000. 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. Learning and Work Institute estimates this figure may rise next month, if unemployment follows the claimant count up. chart 14
Chart 15: UK employment

Employment fell by 3,000 on the figure published last month, to 32,394,000. chart 15
Chart 16: Employment rate in the UK

The employment rate fell by 0.1 percentage points over the quarter, to 75.5%. 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 this month, but is up 30,000 over the quarter. The latest benefit figures are for February, and exclude Universal Credit claimants.

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 the benefit measures (latest for February) 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.

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 2018

This quarter, 4 regions showed a rise in the employment rate, led by Wales and the North West. The employment rate fell in 8 regions, led by Northern Ireland and the South East. chart 19
Chart 20: Unemployment rate quarterly change in regions – June to August 2018

8 regions showed an improvement in the unemployment rate this quarter. 4 showed a worsening. The rises were led by the Northern Ireland and the South East. chart 20
Chart 21: Inactivity rate quarterly change in regions – June to August 2018

Overall, there was a 0.2 percentage point rise in the inactivity rate. 8 regions showed rises in inactivity, led by the Scotland and the East of England. chart 21

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If you have any questions, contact Paul Bivand
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