Tuesday, 20 December 2011

Labour Market Statistics December 2011

(this post is a copy of document sent to contacts within an hour of statistics' publication -a briefing of January's LMS will be available on this site by 10.30am on 18th January 2012 - the day of the January LMS publication)

On Wednesday the 14th of December, the Office for National Statistics published the Labour Market Statistics (LMS) for December, which covers Labour Force Survey data for the period August-October 2011.  This confirms the expectations of most commentators that employment rates would again fall and unemployment would increase.   Youth unemployment (16-24 year olds) has also increased, reaching 1.03 million, at the highest level since comparable records began.


In the UK as a whole during the period August-October 2011, 70.3% of adults (aged 16-64) were in employment, which is 0.2 percentage points lower than the previous quarter (May-July 2011).  This is equivalent to 29.1 million adults in employment, 63,000 lower than the previous quarter.
The number of employees fell by 252,000 compared to the previous quarter (to reach 25 million).   The number of people who are self-employed increased by 166,000 (to reach 4 million).  This is the highest number of self-employed people since comparable records began (in 1992).

A significant proportion of the increase in self-employment is likely to be due to necessity – i.e. individuals starting their own businesses having been unable to find suitable employment.  This can be a concern for policy makers, as research has shown that people moving into self-employment in times of labour  market difficulty can often ‘trade down’ on their skills to activities that may be associated with relatively low levels of pay.

Public sector employment fell significantly, by 67,000 between June and September to reach 6 million, the lowest figure since September 2003.  Conversely, private sector employment increased by only 5,000 over the quarter, to reach 23 million.

The unemployment rate, based on the International Labour Organisation (ILO) definition[1], for August -October was 8.3% of economically active adults, which was 0.4 percentage points higher than the previous quarter.  This is equivalent to a total of 2.6 million adults unemployed, an increase of 128,000 on the previous quarter.  The number of unemployed adults is the highest it has been since January 1996.

Youth Unemployment
There has been particular concern about youth unemployment (16-24 year olds) over recent months, with the number exceeding a record 1 million according to last month’s LMS.   It has now reached 1.03 million, or 22% of economically active 16-24 year olds.  Compared to the previous quarter (May-July 2011) this has increased by 1.2 percentage points and 54,000 individuals.  Youth unemployment is at its highest level and rate since comparable records began in 1992.

Job Seekers’ Allowance Claimants
The proportion of Job Seekers Allowance (JSA) claimants in the UK in November 2011 was 5.0% of adults aged 16 and over, which is unchanged from the previous month but 0.4 percentage points higher than the same period a year earlier.  This is equivalent to 1.6 million adults claiming JSA across the UK, up 3,000 from the previous month and 138,600 on the same period a year earlier.

The claimant count measure of unemployment is more timely than the ILO-based measure described above and is also not affected by issues related to survey sample size – as it is a count of claimants drawn from Jobcentre Plus management data.  It is generally lower than the ILO-based measure because not all unemployed people claim JSA, and not all are eligible to claim.  However, it can be affected by changes to the overall benefits system.  Recently changes to Incapacity Benefits (IB) have meant that some people declared ineligible for IB will have started to claim JSA, increasing the claimant count.  However, so far the effect of this development on the claimant count has been very small.

Redundancies and Vacancies
In the three months to October 2011, 161,000 people had become redundant, which is lower than the previous quarter (which included many public sector redundancies implemented at the start of the 2011-2012 financial year) but 2,000 higher than the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) has fallen, to 455,000 in the period September-November 2011, which is 8,000 lower than in the previous quarter.  Given the relatively high level of unemployment, this now means that there are 5.7 ILO unemployed adults to every one vacancy, up from 5.5 in the previous quarter.

Earnings and Hours Worked
For Great Britain (which excludes Northern Ireland), the annual growth rate for total pay (including bonuses) fell by 0.3 percentage points on the previous quarter to reach 2% in August-October 2011. The whole economy earnings annual growth rate for regular pay (excluding bonuses) increased by  0.1 percentage points to reach 1.8% in the three months to October.

Estimates of total hours worked show that, whilst fewer people are in employment and earnings growth continues to remain modest, the average number of hours worked by individuals in employment has increased by 0.2 hours compared to the previous quarter, to 31.6 hours a week in the period August -October 2011.

Key Regional and Local Developments
·         Most English regions (with the exceptions of the North West, West Midlands and South West) experienced a fall in employment in August-October 2011 compared to the previous quarter.   The North East and Yorkshire & the Humber both experienced the largest falls in employment rates, by 0.8 percentage points on the previous quarter to 65.1% and 67.7% respectively.  Yorkshire & the Humber also saw the largest fall in the number of adults in employment, by 27,000, followed by the East Midlands, where the number in employment fell by 26,000 on the previous quarter.
·         In the East Midlands, the latest employment rate is 71.7% of adults aged 16-64, which is higher than the national average (70.3%).  This fell by 0.3 percentage points on the previous quarter but represents an increase of 1 percentage point on the same period a year earlier.
·         Unemployment has increased in all regions except for the East Midlands and the South West.  The ILO rate increased most in the East of England compared to the previous quarter, by 0.8 percentage points to 7.2% - although this remains low compared to the regions in the north and midlands.  The highest unemployment rate is in the North East, at 11.7% of economically active adults.
·         In the East Midlands, unemployment fell slightly compared to the previous quarter, by 0.1 percentage points to 7.9%, which is 0.4 percentage points lower than the average for the UK.
·        Claimant count rates have remained stable in many East Midlands local areas over the last two months, having increased for much of 2011.  However, it also shows that disparities between the areas with the highest unemployment, notably Nottingham and Leicester, and the areas with low unemployment  (such as Rutland and Leicestershire) have widened. 
·         In November 2011, Nottingham had the highest claimant count rate in the East Midlands, at 6.1% of residents, followed by Leicester at 5.8%.  This has changed little in both cases over the last two months, but is up significantly on the same period a year earlier.  In Nottingham, 13,606 individuals were claiming JSA in November 2011.  

[1] Defined as those who are out of work but available for, and actively looking for, employment within a set period.  This is expressed as the proportion of ‘economically active’ (employed plus unemployed) adults.

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