Making learning and work count

Labour market LIVE from Learning and Work Institute
14 May 2019

  • Unemployment is 1,298,000, down by 45,000 from last month’s published figure (quarterly headline has fallen by 65,000) and the unemployment rate is 3.8%, down by 0.1 percentage points on last month and down by 0.2 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 1,085,200, up by 24,700 on last month, and the claimant rate is 3.0%.
  • The number of workless young people (not in employment, full-time education or training) is 933,000. It fell by 18,000 on the quarter. This represents 13.5% of the youth population (down by 0.2 percentage points) on the quarter.
  • Youth unemployment (including students) is 467,000, and is down by 43,000 on the quarter.
  • There are 1.5 unemployed people per vacancy
  • The employment rate is 76.1% (no change on last month’s published figure and up by 0.2 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 14 May are the second consecutive set of numbers that suggest that the labour market is slowing.

Duncan Melville, chief economist at Learning and Work Institute, commented:

‘While much of the comment on today's labour market numbers will focus on the unemployment rate reaching a new low of 3.8%, the lowest rate since late 1974, digging a little deeper into the numbers reveals a slowing labour market which we highlighted last month. Unemployment has fallen in the month (by 45,000) but so has employment so this is down to a substantial rise in economic inactivity - i.e. people leaving the labour market. Amongst the economically inactive there has been a substantial rise in the number who do not want a job. Vacancy levels have been stuck at around 850,000 for seven months and the slight decline in wage growth also appears consistent with a slowing labour market.

In a slowing labour market, it becomes especially important that Jobcentre Plus is effective in its role of helping workless individuals back into work. Hence, the continued, and dramatic, rise in the claimant count, up by over 220,000, a rise of quarter, in the last year is very worrying. It suggests, as we have argued before, that the welfare to work system, which has been so important over the last 30 to 35 years to reducing worklessness, is no longer functioning as effectively as it did in the UK. This is potentially storing up trouble for the longer term.’

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

"It is particularly worrying that the flows figures for Jobseeker's Allowance claimants - which, from January 2019 relate to new claimants for contribution-related JSA (or new-style JSA) seem to show similar patterns to the last time contribution-related and income-based benefits were separated, before 1996, before the introduction of the Jobseeker's Agreement where claimants agreed the steps they would take to get a job."

Employment rose by 99,000 between October to December 2018 and January to March 2019. In the last 12 months employment increased by 354,000.

Unemployment reduced by 65,000 between October to December 2018 and January to March 2019. and the unemployment rate is down by 0.2 percentage points to 3.8% in the quarter the lowest level since 1974.

Economic inactivity reduced by 23,000 between October to December 2018 and January to March 2019. and the inactivity rate decreased by 0.1 percentage points to 20.8% in the quarter.

The national claimant count is up by 24,700. 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 23,400 in the month to April. Therefore, it should not be surprising that figures for local areas will show increases compared to the national picture over the last few months.

The claimant count flows figures are affected by the ending of new claims for income-based JSA with the full roll-out of Universal Credit. As from January 2019, the only new claims counted as JSA are for the new-style contribution-based benefit (similar in some respects to pre-1996 Unemployment Benefit). Longer-term JSA claimant numbers are falling, though whether this is because people are finding work or being transferred to Universal Credit is not clear.

Youth unemployment is showing a quarterly fall. There are still 467,000 unemployed young people, and 330,000 (4.8% of the youth population) who are unemployed and not in full-time education.

Universal Credit or Jobseeker’s Allowance and therefore are not receiving official help with job search is now 40.4%.

A total of 42,000 were counted as in employment while on ‘government employment and training programmes’, where the Office for National Statistics continues to count Work and Health Programme (etc.) participants as ‘in employment’ by default. This number reduced by 4,000 this quarter. Self-employment rose by 90,000 this quarter. The number of employees has risen by 3,000 in the quarter. Involuntary part-time employment is up by 39,000 this quarter to 0.9 million, 11.0% 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 1,298,000. It has has fallen by 45,000 from the figure published last month. The unemployment rate was down by 0.1 percentage points to 3.8%. 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 20% (260,000). This follows from the strong rise in the claimant count with the full roll-out of Universal Credit, while ILO unemployment has fallen. 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 11,000 from last month’s figure and is now 118,000.

The youth long-term Jobseeker’s Allowance count (but not UC where data remains unavailable) remains far behind, at 15,100. The count fell by 700 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 276,000. The Jobseeker’s Allowance measure is 139,300.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 9.9% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 2.9%. For those aged 50 and over it is 2.7%. The quarterly change is down 0.5 percentage points (pp) for 18 to 24 year olds, down 0.1 pp 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 (933,000) has fallen in the past quarter by 18,000 , or 1.9%, but risen in the month. The quarterly fall was largely among the unemployed, with the number of economically inactive young people not in full-time education or training falling at a lower rate. 65% of the number of out of work young people who are not in full-time education were counted as economically inactive. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has fallen by 26,000 since last month’s figures, to 467,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 5,700, to 206,700. There are 133,000 unemployed young people who are not in education, and do not claim Universal Credit or Jobseeker’s Allowance, 40.4% 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 is up by 24,681 in April, taking the total to 1,085,169. ONS' claimant count before seasonal adjustment is up by 23,447 to 1,116,579. This change is directly comparable to the local level claimant count changes published today.

Learning & Work's seasonally adjusted estimate rose by 14,400 to 1,066,100. chart 8
Chart 9: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures are affected by the end of new claims for income-based JSA with the completion of Universal Credit roll-out at the end of 2018. Off-flow rates have increased for all claimants other than the shortest term, though whether they have simply been counted as new Universal Credit claimants is not completely clear.

The quarterly off-flow rate for new JSA claimants (all for new-style contribution-related JSA) is around the level reached in the peak of the recession in 2009, and, perhaps a more relevant comparison, similar to that usual before the introduction of JSA in 1996, when there were major changes to intensify the work-search regime. chart 11
Chart 10: Jobseeker’s Allowance – proportion of starters in month becoming longer-term unemployed

The proportion of starters becoming 12-month claimants is now 13.1%. This is likely to fall over the next few months as the proportion of starters becoming 9-month claimants has fallen by 1.0 percentage points over the last three months.

These figures are based on those in Chart 9, but show the patterns of the same people passing through successive quarterly thresholds. chart 12
Chart 11: Vacancies – whole economy survey

Vacancies (in the Office for National Statistics survey of the whole economy) fell slightly this month, to 846,000. As the number of vacancies is quite volatile, and frequently revised, the Office for National Statistics uses a three-month average. chart 13
Chart 12: Unemployed people per vacancy

There are 1.5 unemployed people per vacancy. chart 14
Chart 13: UK employment

Employment fell by 24,000 on the figure published last month, to 32,697,000. The quarterly change is still up, however. chart 15
Chart 14: Employment rate in the UK

The employment rate has risen by 0.2 percentage points over the quarter, to 76.1%. The reduction visible in the chart is within rounding to 76.1% (from 76.13% to 76.06%). chart 16
Chart 15: Claimants for inactive benefits and the economically inactive – inactivity benefits

The number of people inactive owing to long-term sickness is largely stable, while the benefit figure fell.

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. Universal Credit statistics for claimants by conditionality regime do not permit separation of those claiming on health grounds from people with care responsibilities (such as lone parents). chart
Chart 16: Claimants for inactive benefits and the economically inactive – lone parents

The survey figures (showing those looking after family) rose while benefit measures fell sharply.

The sharp fall is likely to be due to lone parents claiming Universal Credit, where the regular statistics do not provide information permitting counting the numbers of workless lone parents receiving benefits.

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 17: Employment rate quarterly change in regions – January to March 2019

This quarter, 7 regions showed a rise in the employment rate, led by the East Midlands and Northern Ireland. The employment rate fell in 5 regions, led by Wales and the North East. chart 19
Chart 18: Unemployment rate quarterly change in regions – January to March 2019

8 regions showed an improvement in the unemployment rate this quarter. 4 showed a worsening. The rises were led by Wales and the South East. chart 20
Chart 19: Inactivity rate quarterly change in regions – January to March 2019

Overall, there was a 0.1 percentage point fall in the inactivity rate. 6 regions showed rises in inactivity, led by the North East and the South West. chart 21

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