Making learning and work count

Labour market LIVE from Learning and Work Institute
19 February 2019

  • Unemployment is 1,363,000, a fall by 7,000 from last month’s published figure (quarterly headline fell by 14,000) and the unemployment rate was 4.0%, no change on last month and down by 0.1 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 1,010,700, and is up by 14,200 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 951,000, and has risen by 9,000 on the quarter, representing 13.7% of the youth population (up by 0.2 percentage points).
  • Youth unemployment (including students) is 510,000, and increased by 33,000 on the quarter.
  • There are 1.6 unemployed people per vacancy. Learning and Work Institute estimates this figure may stay at this low level next month.
  • The employment rate is 75.8% (rose by 0.1 percentage points on last month’s published figure and is up by 0.3 percentage points in the preferred quarterly measure).

Learning and Work Institute comment

The labour market figures published on 19 February are the third set of positive monthly numbers.

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

The labour market numbers published today are another set of positive figures. Employment is up substantially, and economic inactivity is down substantially in the quarter (October to December 2018 compared to July to September 2018) both for the third month in a row. In addition, unemployment fell slightly in the quarter following three months of figures showing small rises.

The employment rate has hit another record high, the inactivity rate a record low and the unemployment rate is at its lowest since December 1974 when Slade were at number one with Merry Christmas Everyone.

The number of vacancies also increased to a new record high of 870,000 in January having been around 850,000 for the previous four months.

Annual wage growth was 3.4% in the three months to December continuing the gentle rise seen since the middle of last year. After accounting for inflation, real wage growth was 1.2% - the strongest rate of growth for two years. All these figures suggest a labour market in robust health with strong levels of labour demand.

These labour market numbers are surprisingly positive given the slowdown in economic growth and ongoing uncertainty surrounding how the UK will exit the EU. ONS figures released last week indicated that 2018 saw the slowest rate of annual growth for the UK economy since 2012. The question that remains is can this benign state of affairs continue? Survey data for new hires showed a clear weakening in January with IHS Markit noting that the numbers placed into permanent job roles fell in January for the first times since the middle of 2016. In addition, the labour market lags the overall economy, so it may be that the softness in economic growth has yet to be seen in the published labour market figures which, at the moment, only cover the period to the end of 2018. We will be watching the labour market numbers in the next few months with interest and some trepidation.

Paul Bivand, L&W's associate director for statistics and analysis added:

One interesting challenge for Universal Credit has emerged in the separate Universal Credit statistics. The end of the January sales has always produced a sharp rise in Jobseeker's Allowance claims. New claims are now virtually all Universal Credit claims. In one week, up to 10th January 2019, 64,288 new UC claims were recorded, 30% higher than the previous maximum in early December. For comparison, in the recession year of 2009, 112,000 new claims a week were recorded over the whole of February, with payment made in two weeks. DWP has been claiming an improvement in timely payment under Universal Credit, so this very large (but seasonal) rise will be a challenge. 

Employment has risen by 167,000 between July to September 2018 and October to December 2018. In the last 12 months employment increased by 444,000.

Unemployment fell by 14,000 between July to September 2018 and October to December 2018. The unemployment rate fell by 0.1 percentage points to 4% in the quarter; the lowest level since early 1975.

Economic inactivity fell by 94,000 between July to September 2018 and October to December 2018. The inactivity rate reduced by 0.2 percentage points to 20.9% in the quarter; the lowest recorded since comparable records began in 1971.

The national claimant count rose by 14,200. 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 42,000 in the month to January. Therefore, it should not be surprising that figures for local areas will show more substantial rises compared to the national picture. The end of January sales and Christmas deliveries normally has this effect.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 10.3%, it is now well below the level in early 2015 of 17%. Jobseeker’s Allowance off-flow rates for JSA claimants fell.

Youth unemployment is showing a quarterly rise. There are still 510,000 unemployed young people, and 344,000 (4.9% 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 46.6%.

A total of 47,000 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 showed little change this quarter. Self-employment increased by 80,000 this quarter. The number of employees also increased by 80,000 in the quarter. Involuntary part-time employment fell by 21,000 this quarter to 0.9 million, 10.6% 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 has reduced by 7,000 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 stayed 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 28.4%; (387,000). 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 9,000 from last month’s figure and is now 146,000.

We do not show Universal Credit long-term claims for young people as these do not clearly show the period unemployed on UC, rather it shows the total unemployed, inactive or employed with an active UC claim. During a UC claim, a person may, among other changes, move from work into unemployment or vice versa. The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 19,100. chart
Chart 4: Adult long-term unemployment (12 months and over, 25+)

Adult long-term unemployment on the survey measure is now 265,000. The Jobseeker’s Allowance measure is 151,400.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 10.4% of the economically active – excluding one million economically inactive students from the calculation. The rate for those aged 25 to 49 is 3.0%. For those aged 50 and over it is 2.7%. The quarterly change is up 0.3 for 18 to 24 year olds, down 0.2 for 25 to 49 year olds, and down 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 (951,000) has risen in the past quarter by 9,000, or 0.9%. The 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 fallen by 1,000 since last month’s figures, to 510,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants rose last month by 5,000, to 196,000. There are 160,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance, 46.6% 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 14,198 in January, taking the total to 1,010,655. ONS' claimant count before seasonal adjustment rose by 42,000 to 1,001,000. This latter change is directly comparable to the local level claimant count changes published today.

L&W's seasonally adjusted estimate rose by 21,800 to 1,020,000. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims rose by 2,500 this month, to 26,100. Meanwhile the number of leavers fell, by 9,700, to 37,300.

As Universal Credit is now fully rolled out, new Jobseeker's Allowance claims will be for the National Insurance Contribution-related JSA benefit, which can be received as well as Universal Credit (in the same way as Unemployment Benefit and Income Support worked before 1996). 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 sharply to 10.3% as Universal Credit rollout has reduced new JSA claims over the last few months, as new claimants are most likely to leave benefits quickly.. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show a decrease in off-flow claimants at all lengths of unemployment. These are JSA claimants, so management of the rapidly reducing JSA numbers may be less effective.

The proportion staying beyond three months has risen to 54.6%. 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 15.7%. This is likely to fall over the next few months as the proportion of starters becoming 9-month claimants has fallen by 1.4 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) rose this month, to 870,000. 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 remain at the same level next month. chart 14
Chart 15: UK employment

Employment increased by 55,000 on the figure published last month, to 32,597,000. chart 15
Chart 16: Employment rate in the UK

The employment rate increased by 0.3 percentage points over the quarter, to 75.8%. chart 16
Chart 17: Claimants for inactive benefits and the economically inactive – incapacity benefits

The number of people inactive owing to long-term sickness rose, while the updated benefit figure fell.

This chart shows claimants of Employment and Support Allowance (the orange dots), compared with survey figures for the economically inactive owing to long-term sickness. The benefit figures do not yet include Universal Credit full service claimants. chart 17
Chart 18: Claimants for inactive benefits and the economically inactive – lone parents

The survey figures (showing those looking after family) are decreasing slowly while benefit measures have fallen.

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). The benefit figures do not yet include Universal Credit full service claimants. chart 18
Chart 19: Employment rate quarterly change in regions – October to December 2018

This quarter, 10 regions showed a rise in the employment rate, led by Wales and Northern Ireland. The employment rate fell in two regions, London and the West Midlands. chart 19
Chart 20: Unemployment rate quarterly change in regions – October to December 2018

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

Overall, there was a 0.2 percentage point fall in the inactivity rate. Three regions showed rises in inactivity, led by the West Midlands and London. chart 21

This newsletter is produced by Learning and Work Institute and keeps readers up to date on a wide range of learning and work issues.

If you have any questions, contact Paul Bivand
© 2019 Learning and Work Institute. All rights reserved. To subscribe click here
To unsubscribe, click here.To view this email in your browser click here.

Email Marketing by ActiveCampaign