On the 18th of April, the Office for National Statistics published the latest monthly Labour Market Statistics, which covers Labour Force Survey Data for the period December 2011 to February 2012 and Jobseekers’ Allowance claimant data for March 2012. This release was accompanied by the recent news that inflation, on the Consumer Price Index, has increased to 3.5% (after falling for 5 consecutive months). Therefore, there has been a lot of attention paid to the ONS’ earnings growth estimates, the cost of living and the prospects of any recovery in consumer spending.
Unemployment and Employment Rates
LFS data for the three months to February 2012 suggests that the unemployment rate has fallen by 0.1 percentage points on the previous quarter, to 8.3%. This is equivalent to a fall of 35,000 in the number of economically active adults unemployed according to the ILO definition – to reach 2.65 million individuals. [1] This is the first quarterly fall in unemployment since March-May 2011.
However, the number of unemployed women in the three months to February 2012 increased by 8,000 to reach 1.14 million – which is the highest level since the three months to November 1987. Overall unemployment fell because the number of men who were unemployed fell by 43,000 (to reach 1.51 million). The gender difference in unemployment could be associated with the significant falls in public sector employment, which accounts for activities where women are known to be overrepresented (e.g. local government, health and education).
The number of people unemployed for more than 12 months reached the highest level since the three months to September 1996.
The employment rate (for adults aged 16-64) increased slightly on the previous quarter, by 0.1 percentage points to 70.4%. This increase was due to a strong increase in the number of individuals employed part-time, by 80,000 to reach 7.9 million. This masked the fall in full-time workers, by 27,000. As in previous quarterly releases, the number of people working part-time because they cannot find a full-time job remains at its highest level since comparable records began in 1992, at 1.4 million.
This data led the BBC to draw attention to ‘underemployment’, quoting Mike Fetters, Director of Totaljobs.com, saying that the statistics: "flatter to deceive… whilst on the surface they look rosier than those of the past few months, they hide a number of concerns - not least the staggeringly high levels of underemployment.”
Earnings Estimates
Concern about the cost of living dampened media responses to the fact that unemployment fell. In the three months to February 2012, total pay (including bonuses) rose by only 1.1 per cent on a year earlier, down 0.2 on the three months to January 2012. Regular pay (excluding bonuses) rose by only 1.6 per cent on a year earlier, unchanged on the three months to January 2012. The Guardian drew significant attention to these estimates, stating that weak earnings growth alongside stubbornly high inflation would seriously undermine the Office for Budgetary Responsibility’s forecast for recovery in 2012 – which was partly based on an expectation that consumer confidence would increase through the year due to falling inflation and rising wage growth.
The increase in inflation to 3.5% in March was largely due to rising food and clothing prices, but the end of five months of consecutive falls in inflation has led many commentators to speculate that inflation may now stay above 3% through 2012, in contrast to previous expectations that it would fall below the 2% target by the end of the year. Paul Tucker, deputy head of the Bank of England, stated that "in the near term there is considerable uncertainty about the path that it will follow".
Job Seekers’ Allowance Claimants
In contrast to the fall in quarterly ILO unemployment, the more timely measure of claimant count unemployment for March 2012 increased compared to the previous month, by 3,600 to reach 1.61 million – equivalent to 4.9% of adults aged 16 and over. This is unchanged from the previous month but up 0.4 percentage points on the same period a year earlier.
Redundancies and Vacancies
In the three months to February, 174,000 people had become redundant, up 11,000 from the previous quarter and up 47,000 from the same period a year earlier.
The number of vacancies (advertised through Jobcentre Plus) in the three months to March 2012 was unchanged from the three months to December 2011, at 464,000, but down 19,000 on the same period a year earlier.
Key Regional Developments
· The number of people who were unemployed fell in most regions, with the exception of the North West (where it increased by 0.6 percentage points on the previous quarter), the East of England and the South West (by 0.2 percentage points respectively).
· Unemployment fell the most in Yorkshire and the Humber, by 0.9 percentage points and 21,000 individuals – although the overall rate of unemployment in the region remains significantly higher than the national average, at 9.3% compared to 8.3%.
· In the East Midlands, unemployment fell very slightly, by 1,000 individuals (or 0.1 percentage points), and remains below the national average at 8.2%. The employment rate in the East Midlands increased by 0.4 percentage points, or 7,000 individuals, and remains higher than the national average at 71.5% compared to 70.4%.
Source: ONS Crown Copyright, Labour Market Statistics, April 2012.
[1] According to the International Labour Organisation (ILO), this is 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.
