Making learning and work count

Labour market LIVE from Learning and Work Institute
13 November 2018

  • Unemployment is 1,381,000, up by 18,000 from last month’s published figure (quarterly headline increased by 21,000) and the unemployment rate 4.1%, rose by 0.1 percentage points on last month and also is up by 0.1 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 967,700, increased by 20,200 on last month, and the claimant rate is 2.7%.
  • The number of workless young people (not in employment, full-time education or training) is 951,000, and it fell by 31,000 on the quarter, representing 13.6% of the youth population (down by 0.4 percentage points).
  • Youth unemployment (including students) is 476,000, down by 16,000 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 on last month’s published figure and down 0.1 percentage points in the preferred quarterly measure.

Learning and Work Institute comment

The labour market figures published on 13 November confirm our judgement that the labour market is slowing but contain some welcome news on inactivity. However, claimant unemployment is on course to hit one million by January 2019, two months earlier than we estimated last month.

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

‘Unfortunately, as we have been anticipating for several months, the slowdown in the UK has finally shown up in an increase in unemployment in today’s figures - up by 21,000 in the quarter to July to September 2018. The claimant measure of unemployment increased by 20,000 in the month to October 2018 and, extrapolating the rate of increase seen in the last year, is on course to hit one million, by January 2019 - an unwelcome opening to the New Year.

Employment showed a small increase in the same quarter - up by 23,000, but this is markedly down on the quarterly increases above 100,000 seen earlier in the year. There is welcome news on economic inactivity, which for people of working age remained flat over the quarter. This contrasts with the quarterly increases of over 100,000 reported in the last two months. Hence, in the latest quarter individuals are no longer withdrawing from the labour market. This offers hope that employment can rise more quickly when the economy strengthens.

However, it is not clear when such an upturn in the economy will come about. The Office for Budget Responsibility in their latest (Budget 2018) forecast expect growth of around 1.5% in the next few years, which is very poor by historic standards. In addition, ongoing Brexit uncertainty, with the prospect of a No Deal chaotic exit from the EU still a distinct possibility, remains a drag on business confidence and economic growth.

Vacancy levels reached a new high of 845,000 and have been increasing for the last six months. Often this would be seen as a positive indicator of strong demand for labour. However, such an interpretation is not consistent with the paths of employment, unemployment and economic inactivity in recent months. This suggests that this high level of vacancies is down to a lack of appropriate candidates for positions with employers, who thus keep vacancies open.

Finally, to end on a positive note, annual wage growth increased again to 3.2% in September, and after accounting for inflation were up by 0.9% - the largest increase in real wages since December 2016. The combination of low unemployment and rising real wages that seemed to have disappeared from the UK labour market may be reasserting itself.

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

"The claimant count of unemployed benefit claimants rose sharply again this month, while survey unemployment rose more slowly. The rise in the claimant count towards the 1 million figure is clearly associated with the rollout of Universal Credit. The Department for Work and Pensions argues the rise is due to a step-change as Universal Credit counts more people as required to look for work. The Department's response has been to propose a supplementary measure lifting the historic claimant count to what it would have been under a "Universal Credit world". This is planned to be published from January 2019. Learning and Work Institute's predecessor, the Unemployment Unit, counted 31 changes to the claimant count from 1979 to 1996. It is important that the main unemployment measure (ILO unemployment) is not distorted by benefit changes, but also that administrative responses to economic shocks are accurately recorded."

Employment is up by 23,000 between April to June 2018 and July to September 2018. In the last 12 months employment has risen by 350,000.

Unemployment rose by 21,000 between April to June 2018 and July to September 2018. The unemployment rate rose by 0.1 percentage points to 4.1% in the quarter, almost the lowest level since 1975.

Economic inactivity rose by 1,000 between April to June 2018 and July to September 2018. The inactivity rate was stable at 21.2% in the quarter.

The national claimant count has risen by 20,200. This takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, increased by 15,000 in the month to October. 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 takes place.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has fallen. At 13.6%, it is now well below the level in early 2015, at 17.1%. Jobseeker’s Allowance off-flow rates for JSA claimants fell.

Youth unemployment is showing a quarterly fall. There are still 476,000 unemployed young people, and 305,000 (4.4% 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 either Universal Credit or Jobseeker’s Allowance, and therefore are not receiving official help with job search, is now 42.2%.

A total of 46,000 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 fell by 4,000 this quarter.

Self-employment fell by 17,000 this quarter. The number of employees rose by 45,000 in the quarter. Involuntary part-time employment reduced by 68,000 this quarter to 0.9 million, 11% 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 1,381,000. It has risen by 18,000 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 rose by 0.1 percentage points to 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 33.1% (457,000), as the claimant count has risen towards 1 million with Universal Credit roll-out. 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 2,000 from last month’s figure and is now 127,000.

The youth long-term Jobseeker’s Allowance count (but not UC) remains far behind, at 19,500. The count rose by 600 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 303,000. The Jobseeker’s Allowance measure is 152,800.

chart 4
Chart 5: Unemployment rates by age

The 18 to 24 year old unemployment rate (including students) is 10.0% 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 2.8%. The quarterly change is 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 (951,000) has fallen in the past quarter by 31,000, or 3.1%. The fall was largely among the unemployed, with the number of inactive young people not in full-time education or training falling, at a lower rate. More than two-thirds of out of work young people who are not in full-time education are economically inactive. chart 6
Chart 7: Youth unemployment

The number of unemployed young people has risen by 12,000 since last month’s figures, to 476,000.

Meanwhile, the number of young Universal Credit or Jobseeker’s Allowance claimants fell last month by 3,701, to 183,420. There are 129,000 unemployed young people who are not in education, and do not claim Jobseeker’s Allowance, 42.2% 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 20,200 in October, taking the total to 967,735. ONS' claimant count before seasonal adjustment increased by 15,000 to 948,800. 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 20,700 to 971,000. chart 8
Chart 9: Jobseeker’s Allowance – new claims and leavers

The number of new Jobseeker’s Allowance claims fell by 6,200 this month, to 42,700. This does not include Universal Credit new claims (or leavers). Meanwhile the number of leavers also fell, by 4,700, to 59,700. The rollout of Universal Credit affects these figures. Now, 62% 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 13.6% continuing last month's fall. chart 10
Chart 11: Jobseeker’s Allowance – claimants staying through each three-month threshold (seasonally adjusted)

These measures show a decrease in benefit off-flow for claimants at most lengths of unemployment.

The proportion staying beyond three months has risen to 50.4%. 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 14.2%. This is likely to rise over the next few months as the proportion of starters becoming 9-month claimants has risen 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) rose this month, to 845,000. chart 13
Chart 14: Unemployed people per vacancy

There are 1.6 unemployed people per vacancy, the lowest on record. Learning and Work Institute estimates this figure may rise next month, based on the claimant count recording more jobseekers. chart 14
Chart 15: UK employment

Employment rose by 15,000 on the figure published last month, to 32,409,000. chart 15
Chart 16: Employment rate in the UK

The employment rate fell 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, while the benefit figure continued to fall.

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 the 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 – July to September 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 the South West and Northern Ireland. chart 19
Chart 20: Unemployment rate quarterly change in regions – July to September 2018

5 regions showed an improvement in the unemployment rate this quarter. 7 showed a worsening. The rises were led by Yorkshire and The Humber and the North East. chart 20
Chart 21: Inactivity rate quarterly change in regions – July to September 2018

Overall, there was no change in the inactivity rate. 6 regions showed rises in inactivity, led by the Northern Ireland and the South West. chart 21

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