This
morning, the Office for National Statistics published the monthly Labour Market
Statistics for January 2013, which covers Labour Force Survey data for the
period September to November 2012 and Jobseekers’ Allowance (JSA) claimant data
for December 2012. A very slight
increase in employment and a small decrease in unemployment point to a flatter
trend than earlier in 2012. Increases in
employment reported in previous months have been significantly greater. On balance, the labour market between
September to November 2012 and the previous quarter could be described as
broadly flat, with a few interesting exceptions.
In contrast to earlier in 2012, when
part-time jobs were largely responsible for the net increases in employment,
the latest data indicates a stronger increase in full-time employment
compensating for a small fall in part-time employment.
In previous briefings, we have also drawn attention
to falling labour productivity (output per worker) and increasing labour costs
– together supporting the view that employers were ‘hoarding’ excess labour, a
strategy that may become unsustainable in the future if demand does not increase. However, the latest data indicates a slight
increase in output per worker and a slight fall in labour costs. These estimates (for Quarter 3 of 2012)
coincide with a period of overall output growth (with Q3 GDP growth estimated
to be 0.9%). Various survey evidence
published recently, such as data from the Purchasing Managers’ Index published
just before Christmas, indicate a significant fall in service sector activity
at the end of 2012, strongly suggesting that the final quarter of the year
could see a return to negative growth – meaning that the slight increase in
output per worker and fall in labour costs could be short-lived
Weak
earnings growth has been observed through most of 2012, with previous data
releases indicating below inflation rates of earnings growth. The latest data is consistent with this, indicating
that regular pay (excluding bonuses) rose by only 1.4% between
September-November 2012 and the same period a year earlier, compared to the latest CPI inflation
estimate of 2.7%.
Media
coverage of today’s data has generally been positive, with the BBC drawing attention to
continued falls in Jobseekers’ Allowance claimants, to reach the lowest
level since June 2011, alongside falls in long-term unemployment on the Labour
Force Survey measure. However, a slight
increase in youth unemployment has also been picked up in the press coverage –
notable given the rate and number of 16-24 year olds classed as unemployed had
previously been falling since early 2012.
Unemployment
and Employment Rates
LFS
data for the three months to November 2012 indicate that the unemployment rate[1]
has fallen by 0.1 percentage points on
the previous quarter, to 7.7% of the economically active population, which is
equivalent to 2.49 million individuals.
This is 37,000 lower than the previous quarter and 185,000 lower than the
same period a year earlier. However, the number of young people (16-24 year
olds) who are unemployed increased very slightly, by 1,000 on the previous
quarter, to reach 957,000 (20.5% of the economically active population in that
age band).
Long-term
unemployment (adults unemployed for more than one year) fell by 5,000 compared
to the previous quarter, to a total of 892,000 individuals across the UK.
The
employment rate (for adults aged 16-64) increased slightly, by 0.1 percentage
points on the previous quarter, to 71.4%.
The total number of people estimated to be in employment is 29.68
million, up 90,000 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 113,000 on the previous quarter whilst the number of
people in part-time employment fell by 23,000.
However, despite this recent fall, over the year there has been a strong
increase in part-time employment, with 95,000 more men and 144,000 more women
working part time in September to November 2012 compared to the same period in
2011.
Earnings
Estimates
Earnings
estimates continue to point to weak growth in average pay levels, with regular
pay (excluding bonuses), rising by only 1.4% between August to October 2011 and
August to October 2012, whilst total pay (including bonuses) increased by 1.5%
over the same period. This increase is
lower than that reported in previous months (for example, the November 2012
Labour Market Statistics estimated a 1.9% increase in regular pay), suggesting
that 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).
Labour
Productivity and Unit Labour Costs
In contrast with
previous data releases, the amount of (inflation adjusted) output per worker increased
slightly, by 0.6%, between the second and third quarters of 2012. This coincided with the period in which the
overall output of the UK economy was estimated to grow by 0.9%. Conversely, unit labour costs are estimated
to have fallen very slightly over the
same period, by 0.1%.
Job Seekers’
Allowance Claimants
The
number of Jobseekers’ Allowance (JSA) claimants in December 2012 fell slightly
on the previous month, by 12,100 across the UK, whilst the rate remained
unchanged from previous months, at 4.8%.
Redundancies
and Vacancies
In the three months to November 2012, 158,000 people were
made redundant, up 27,000 from
the previous quarter but down 6,000 from the same period a year earlier.
The number of vacancies
(advertised through Jobcentre Plus) in the three months to December 2012 was 494,000
- up 10,000 compared to the previous
quarter and up 33,000 on the same period a year earlier. The number of ILO unemployed adults to every
one vacancy in the three months to November 2012 has fallen to 5.1, compared to
5.3 in the previous quarter.
Key Regional
Developments
- The level of unemployment fell compared to the previous quarter in the North East, Yorkshire and the Humber, London and the South West – most significantly in London, by 26,000 and 0.6 percentage points, and the North East, by 10,000 and 0.8 percentage points. However, the North East continues to have the highest unemployment rate of the nine English regions, at 9.1%, followed by the West Midlands, at 8.9%.
- Unemployment levels increased in the North West, the East Midlands, the West Midlands, the East of England, and the South East – most significantly in the East Midlands, by 10,000 individuals and 0.4 percentage points, and the West Midlands, by 13,000 individuals and 0.3 percentage points.
- In the East Midlands, employment also fell slightly on the previous quarter, by 3,000 individuals or 0.5 percentage points. The overall employment rate in the East Midlands for the period September to November 2012 was level with the UK average, at 71.4%, whilst the unemployment rate was higher, at 8.2% compared to 7.7%. With the exception of London (with an unemployment rate of 8.3%), the latest data indicates a very clear north-south divide, with the five Midlands and Northern regions all having unemployment rates in excess of 8%, whilst the East of England, the South West and South East all have unemployment rates below 7%.
[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.
