Wednesday, 20 February 2013

February 2013 Labour Market Statistics Briefing

The Office for National Statistics’ Labour Market Statistics (LMS) release for February 2013 includes Labour Force Survey data for the final three months of 2012 and Jobseekers’ Allowance (JSA) data for January 2013.  The ONS have also summarised recent analysis of public and private sector employment and comparisons between the UK, US and EU labour markets.   The latest LFS data for the UK shows an increase in employment, by 154,000 individuals compared to the previous quarter (July-September 2012) and a decrease in unemployment, by 14,000 individuals.  Claimant count unemployment has also fallen, by 12,500 in January 2013 compared to December 2012.  

Commentators in the media have reacted positively, with the Guardian describing the increase in employment as ‘huge’ (although this latest increase is less than previously seen in a number of quarters in 2011 and 2012).  The BBC have also commented very positively on the latest data, although they have placed more emphasis on continued weak earnings growth (which is still well below the rate of inflation, a consistent picture since mid-2008).  The BBC quote CIPD chief economist John Philpott: “Where we're seeing the weakness in the labour market and in the UK economy is on the pay side…  People are having to price themselves into jobs.  The economy is producing the same amount of output with far more people - that is called falling productivity." 

No new productivity estimates have been published within the February LMS, but the slight increase in output per worker reported in last month’s briefing does not significantly affect the picture of weak or falling productivity and rising unit labour costs observed throughout 2012.

The number of people employed in the public sector fell by 324,000 across the UK between September 2011 and September 2012 whilst the number of private sector jobs increased by 823,000.  However, a significant proportion of this change reflects the re-classification of a range of educational bodies from public to private sector (accounting for approximately 200,000 of the fall in public sector employment and the increase in private sector employment respectively). 

International comparisons show that unemployment in the UK increased much more slowly between 2007 and 2009 than in either the US or the EU.  In the UK, unemployment peaked at around 8% of economically active adults in early 2009 and then remained fairly stable, whilst unemployment in the US peaked at 10% in 2009 before stabilising then recovering through 2010-12.  However, unemployment across the EU has continued to increase –  to 10.7% in December 2012, compared to 7.8% in both the US and UK.  Greece had the highest unemployment rate in the EU, at 26.8% (October 2012) whilst Austria had the lowest rate, at 4.3% (December 2012).

Unemployment and Employment Rates
LFS data for the three months to December 2012 indicate that the unemployment rate[1]  has fallen by 0.1 percentage points on the previous quarter, to 7.8% of the economically active population, which is equivalent to 2.5 million individuals.  This is 14,000 lower than the previous quarter and 156,000 lower than the same period a year earlier.   However, the number of young people (16-24 year olds) who are unemployed increased, by 11,000 on the previous quarter to reach 974,0000 (20.8% of the economically active population in that age band).

Long-term unemployment (adults unemployed for more than one year) fell by 15,000 compared to the previous quarter, to a total of 879,000 individuals across the UK.

The employment rate (for adults aged 16-64) increased by 0.3 percentage points on the previous quarter, to 71.5%.  The total number of people estimated to be in employment is 29.73 million, up 154,000 on the previous quarter.   The employment rate is 1.1 percentage points higher than the same period a year earlier, although it remains lower than its pre-recession peak of 73% (March-May 2008).

Full-time employment increased by 197,000 on the previous quarter whilst the number of people in part-time employment fell by 43,000.  This is equivalent to 73% of employed adults working full-time and 27% working part-time.  Compared to the same period a year earlier (the three months to December 2011), the number of people working full-time increased by 394,000 – the largest annual increase since 2005.  However, this has not yet offset the decrease in full-time employment experienced during the 2008-09 recession.  The number of individuals in full-time employment is currently estimated to be 378,000 lower than in the first quarter of the 2008-09 recession, April-June 2008. 

Earnings Estimates
Average UK earnings growth continues to be very weak, with regular pay (excluding bonuses) rising by only 1.3% between the last quarter of 2012 and October-December 2011.  Total pay (including bonuses) has risen by only 1.4% over the same period.  These rates of growth are lower than those reported last month (in the January LMS) and reported in both the November and December LMSs.  Although employment continues to rise, UK workers also continue to experience reductions in real-terms pay (with the rate of inflation currently estimated to be 2.7% on the CPI measure), pointing to sustained pressure on real household incomes.  The weak increase in regular pay reported in the latest LMS is the lowest since the end of 2009. 

Job Seekers’ Allowance Claimants
The number of Jobseekers’ Allowance (JSA) claimants in January 2013 fell slightly on the previous month, by 12,500 across the UK, whilst the rate remained unchanged from December, at 4.7% (December’s rate has been revised down from 4.8% reported in last month’s briefing).

Redundancies and Vacancies
In the three months to December 2012, 145,000 people were made redundant, up 17,000 from the previous quarter, but down 19,000 from the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) in the three months to January 2013 was 487,000 -  up 1,000 compared to the previous quarter and up 24,000 on the same period a year earlier.  The number of ILO unemployed adults to every one vacancy in the three months to December 2012 has fallen to 5.1, compared to 5.2 in the previous quarter.

Key Regional Developments
  • Unemployment levels fell compared to the previous quarter in the North East, Yorkshire and the Humber, London and the South West – most significantly in London, by 10,000 individuals and 0.3 percentage points.  The North East continues to have the highest unemployment rate of the nine English regions, at 9.7%, followed by Yorkshire and the Humber, at 8.9%.
  • Unemployment levels increased in the North West, the West Midlands, and the South East – most significantly in the South East, by 6,000 individuals and 0.1 percentage points.
  • In the East Midlands, employment levels increased very slightly, by 5,000 individuals compared to the previous quarter – although the rate has remained flat, at 71.4%, which is slightly lower than the national average (71.5%), but is not sufficiently different from the average to be statistically significant. Unemployment levels in the East Midlands decreased very slightly on the previous quarter, by 1,000 individuals, but the unemployment rate has also remained flat – at 7.7%, slightly lower than the national average (7.8%), but, again, not sufficiently different to be statistically significant.

[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.

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