On the morning that the Chancellor will be delivering the Budget for 2013-14, the Office for National Statistics published the monthly Labour Market Statistics (LMS) release for March 2013. This contains Labour Force Survey data for the period November 2012 to January 2013 and Jobseekers’ Allowance claimant data for February 2013. Media and political interest will be significant if there is any change to the recent story of slightly rising employment and falling unemployment, especially as Ministers (including the Prime Minister in a speech on the UK economy on the 7th March) have been drawing attention to the relative strength of the UK labour market in the run-up to the budget.
The March 2013 release does not contain any huge shocks for the Chancellor. The number in employment and the employment rate have increased slightly, compared to both the previous quarter and the same period a year earlier. This is consistent with the trend observed since autumn 2011. The number of people economically inactive (neither employed nor unemployed) was down, and the more timely JSA claimant count was also down slightly on the previous month. However, the story from the wider Labour Force Survey measure of unemployment was less positive than in previous LMS releases: although the unemployment rate was unchanged from the previous quarter, the number of people unemployed has increased by 7,000. Wage estimates continue to illustrate the underlying weakness in the wider economy – with total and regular (excluding bonuses) pay rising by only 1.2% compared to the same period a year earlier – lower than the wage growth reported last month, and well below the rate of inflation on the Consumer Price Index (2.7%), indicating the continued squeeze on household incomes.
Additionally, youth unemployment has increased quite significantly on the previous quarter and long-term unemployment has also increased on a number of measures.
Although the increase in total unemployment on the LFS measure has been relatively small (and insufficient to affect the rate of unemployment), the timing of this has affected coverage in the press, with the BBC running a headline that presents the unemployment increase as one of a number of factors putting “pressure” on the Chancellor. However, in light of the unfolding crisis in Cyprus and its wider implications for the Single Currency alongside the range of announcements that will accompany the Budget, it is unlikely that this development in the labour market will remain in the headlines for long.
Unemployment and Employment Rates
LFS data for the three months to January 2013 indicate that the unemployment rate has remained unchanged from the previous quarter (the three months to October 2012), at 7.8% of the economically active population. However, the number estimated to be unemployed has increased, by 7,000 on the previous quarter to a total of 2.52 million.
Long-term unemployment has increased on a number of measures: for those unemployed between 6 and 12 months (up 5,000) and those unemployed for over 2 years (up 2,000). Those who have been unemployed for over one year (but less than 2 years) has fallen by 16,000 on the previous quarter, but the number of individuals unemployed for up to six months has increased by 18,000.
The number of 16-24 years olds who are unemployed increased by 48,000 on the previous quarter, meaning that the youth unemployment rate increased by almost 1 percentage point to 21.2%.
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 131,000 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).
Average UK earnings growth continues to be very weak, with both total (including bonuses) and regular pay (excluding bonuses) rising by only 1.2% between the periods November 2011-January 2012 and November 2012-January 2013, slightly down on the growth rates of 1.3% for both measures published last month (for the periods October-December 2011 and October-December 2012).
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 March LMS is the lowest since the end of 2009.
Job Seekers’ Allowance Claimants
The number of Jobseekers’ Allowance (JSA) claimants in February 2013 fell very slightly on the previous month, by 1,500, whilst the rate remained unchanged from December and January, at 4.7%.
Redundancies and Vacancies
In the three months to January 2012, 133,000 people were made redundant, down 14,000 from the previous quarter and down 40,000 from the same period a year earlier.
The number of vacancies (advertised through Jobcentre Plus) in the period December 2012-February 2013 increased by 2,000 on the previous quarter to total 494,000. The number of ILO unemployed adults to every one vacancy in the three months to January 2013 was 5.1, compared to 5.2 in the previous quarter.
Key Regional Developments
- Unemployment levels fell compared to the previous quarter in the East Midlands, the East of England and London – most significantly in London, by 17,000 individuals and 0.5 percentage points.
- Unemployment levels and rates increased compared to the previous quarter in the North East, Yorkshire and Humber, the West Midlands, the South East and the South West – with the most significant increase in the South East, by 16,000 individuals and 0.3 percentage points. However, the North East continues to have the highest unemployment rate of the English regions, at 9.8% of the economically active population, followed by Yorkshire and the Humber, at 9%.
- In the East Midlands, both unemployment and employment levels fell compared to the previous quarter. This is possible due to an increase In the economically active population (of 14,000 on the previous quarter). Employment fell by 7,000 (0.2 percentage points) in the East Midlands on the previous quarter to a rate of 71.5%, level with the UK average. Unemployment also fell by 7,000 (also 0.2 percentage points) to a rate of 7.7%, just below the UK average of 7.8% (but not sufficiently different to be statistically significant).
 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.