August 2013 Labour Market Statistics Briefing

This morning, the Office for National Statistics published the monthly Labour Market Statistics (LMS) release for August 2013.   This contains Labour Force Survey data for the period April to June 2013 and Jobseeker’s Allowance (JSA) claimant count data for July 2013.  As in the case of the last two months’ LMS, this month’s data is fairly flat, with a slight increase in the employment rate but no change in the rate of unemployment compared to the previous quarter.  The more timely Claimant Count unemployment has fallen slightly, for the second consecutive month.

Compared to the same period a year earlier, a number of these headline measures have started to indicate more significant improvements in labour market conditions.  There are now 301,000 more individuals employed than a year ago in the UK, and 49,000 fewer individuals unemployed.  The economically inactive population (describing individuals who are neither employed nor unemployed, such as full-time carers, students, and the long-term workless who have given up looking for jobs) has fallen by 105,000 compared to the same period a year ago.

However, earnings growth remains very weak, and significantly lower than the rate of inflation (2.8% on the CPI measure in July).  Total pay (including bonuses) is estimated to have increased by 2.1% since April to June 2012, whilst regular pay (excluding bonuses) is estimated to have increased by only 1.1%. 

An Expert Opinion piece published by NTU today looks at trends in male and female unemployment since the onset of recession in 2008.  This suggests that, although unemployment for both men and women increased significantly between 2008 and 2010, male unemployment subsequently recovered whilst female unemployment has continued to increase for much of the period up to spring 2013. 

This has been particularly notable in the East Midlands, where the rate of unemployment for women (for the period April 2012-March 2013) now slightly exceeds that of men, at 7.8% compared to 7.6%.  Women currently make up 47% of the total number of unemployed adults in the East Midlands, up from 42% before the onset of recession, which is significantly higher than the female share of total unemployment in the UK overall. 

This is likely to be affected by the differing sectoral distribution of male and female employment.  Male employment is relatively evenly distributed across the 6 largest sectors (including construction, manufacturing, and financial & business services) whilst female employment is highly concentrated in just 2 broad sectors, public services (accounting for almost half of all employed women in the East Midlands) and distribution, hotels and restaurants (including retail).  These two areas are likely to have been significantly more affected by public sector cuts and the squeeze on household incomes than other sectors, contributing to the differing experiences of men and women in the labour market.

Unemployment and Employment Rates

LFS data for the three months to June 2013 indicates that the unemployment rate[1] was unchanged from the previous quarter (January to March 2013) at 7.8% of the economically active population aged 16 and over.  The number unemployed fell slightly on the previous quarter, by 4,000, and more significantly on the same period a year earlier, by 49,000.  The total number of adults currently estimated to be unemployed is 2.51 million.

The numbers of long-term unemployed have increased on a number of measures.  The number of adults unemployed for six months to a year has increased slightly, by 1,000, but the numbers unemployed for over a year and for over two years have increased more significantly, from 7,000 and 10,000 respectively compared to the previous quarter.

The employment rate (for adults aged 16-64) for April to June 2013 has increased very slightly on the previous quarter, by 0.1 percentage points to 71.5%.  Compared to the same period a year ago, the rate has increased by 0.4 percentage points.  The total number of people in employment was 29.8 million, up 69,000 from the previous quarter and 301,000 on the same period a year earlier.  That this has not resulted in a more significant an increase in the employment rate (those employed as a percentage of the total working age population) is due to the continuing strong growth in the total size of the UK working-age population.

Earnings Estimates

Earnings growth remains weak and below the rate of inflation.  Total pay (including bonuses) increased by 2.1% between April-June 2012 and April-June 2013, whilst regular pay (excluding bonuses) increased by 1.1%.

Job Seekers’ Allowance Claimants

The number of Jobseekers’ Allowance (JSA) claimants in July 2013 fell on the previous month, by 29,200, whilst the rate was down 0.1 percentage points to 4.3% (and down 0.4 percentage points on the same month a year earlier).

Redundancies and Vacancies

In the three months to June 2013, 123,000 people were made redundant, down 17,000 from the previous quarter and down 28,000 from the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) in the period May to July 2013 increased by 19,000 on the previous quarter to total 533,000.  The number of ILO unemployed adults to every one vacancy in the three months to June 2013 was 4.7, down 0.3 percentage points on the previous quarter.

Key Regional Developments

• Unemployment rates and levels fell compared to the previous quarter in the Yorkshire and the Humber, the East of England, South East and South West.  The most significant falls were estimated to be in the South East, with a fall in unemployment of 25,000 individuals and 0.6 percentage points.  The South East has the lowest unemployment rate of the nine English regions, at 6%.
• However, unemployment increased significantly on the previous quarter in the West Midlands, by 18,000 individuals and 0.7 percentage points, to a rate of 9.9%.  This remains below the rate of unemployment in the North East, at 10.3%.
• In the East Midlands, unemployment has increased very slightly, by 4,000 individuals and 0.1 percentage points compared to the previous quarter.  The unemployment rate in the East Midlands for April to June 2013 is estimated to be 7.9% of economically active adults (equivalent to 181,000 individuals), which slightly exceeds the UK average of 7.8%.
• The employment rate in the East Midlands has also increased, by 8,000 individuals and 0.4 percentage points, to a rate of 71.2%, below the UK average of 71.5%.
•  It is possible for both the employment and the unemployment rates to increase at the same time because the number of economically inactive adults (neither employed nor unemployed) has fallen - by 15,000 individuals compared to the previous quarter.  This could be due to individuals who had previously been full-time carers of children or elderly relatives starting to look for work, with national research suggesting that the continued squeeze on household incomes and the impact of benefit changes has particularly affected women.  

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[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.

June 2013 Labour Market Statistics Briefing

This morning, the Office for National Statistics published the monthly Labour Market Statistics (LMS) release for June 2013.   This contains Labour Force Survey data for the period February to April 2013 and Jobseeker’s Allowance (JSA) claimant count data for May 2013.   As in the case of last month’s LMS, this month’s data is fairly flat, with little change in either the employment or unemployment rates on the LFS-based measures, alongside a slight fall in the more timely claimant count unemployment.

Weak earnings growth remains the preeminent story.  Although estimates of earnings growth in the latest release are higher than the estimates published last month, they remain significantly below the rate of inflation.  Total pay (including bonuses) is estimated to have increased by 1.3% since February-April 2012 and regular pay is estimated to have increased by 0.9%.  Between April 2012 and April 2013, prices were estimated to have increased by 2.4% on the Consumer Prices Index (CPI). 

As we have reported previously, earnings growth has been weak since the recession began in 2008, and has been below the rate of inflation for much of this period.  The Institute for Fiscal Studies (IFS) summarised the findings of three linked studies in a special issue of their ‘Fiscal Studies’ journal, also published today.  In these articles, the IFS observe that real wages fell more significantly than in any comparable five year period, with a reduction in wages in real terms of 6% over the period (prior to the recession, wages in the UK were rising by an average of 2% per annum in real terms). 

One-third of workers experienced nominal wage freezes or cuts between 2010 and 2011 (i.e. individuals staying in the same job experiencing a freeze or reduction in their take-home pay).  A total of 70% of UK workers experienced a real wage decrease, reflecting the fact that inflation has outpaced pay growth. The IFS identify a number of factors behind this.  Reductions in nominal pay for workers staying in the same job have been more likely to occur in smaller companies (with larger firms more likely to lay off workers).  Correspondingly, smaller firms (with fewer than 50 employees) have experienced particularly large falls in productivity – of 7% compared to the pre-recession period, compared to no change in firms employing more than 250 employees.  Investment has also fallen more significantly in smaller firms – who may be more likely to substitute cheaper, low skilled labour for investment in machinery etc., thus pursuing more labour intensive (and thus less productive ) strategies.  Additionally, the UK labour force has continued to grow throughout the period since 2008, due to changes to the state pension age, welfare changes (increasing economic activity amongst single parents, for example), indigenous population growth and net migration – which together may be increasing the supply of workers who are prepared to work for a lower wage. 

Claire Crawford, program director at the IFS, summarized the key messages as follows: "The falls in nominal wages that workers have experienced during this recession are unprecedented, and seem to provide at least a partial explanation for why unemployment has risen less – and productivity has fallen more – than might otherwise have been expected.  To the extent that it is better for individuals to stay in work, albeit with lower wages, than to become unemployed, the long-term consequences of this recession in terms of labour market performance may be less severe than following the high unemployment recessions of the 1980s and 1990s."  However, this rather optimistic interpretation is put in a more negative context when reviewing the detail of the IFS journal articles, which illustrate the full extent of falling productivity compared to previous recessions.  Nearly 5 years after the start of the recession, UK output remains 3% lower than the pre-recession level, whilst it was 15% higher within five years of the start of the recession in the early 1990s and 13% higher than at the start of the recession in the early 1980s.  Moreover, the monthly LMS estimates demonstrate that the labour market impacts for certain groups are severe, including when compared to previous recessions, with youth unemployment remaining close to a record 1 million whilst long-term unemployment continues to increase on a number of measures.

Unemployment and Employment Rates

LFS data for the three months to April 2013 suggest that the unemployment rate[1] was unchanged from the previous quarter (November 2012-January 2013) at 7.8% of the economically active population.  The number unemployed fell slightly on the previous quarter, by 5,000, and more significantly on the same period a year earlier, by 88,000.  The total number of adults currently estimated to be unemployed is 2.51 million.

The number of adults unemployed for up to six months has increased by 18,000 (to 1.2 million), whilst the number unemployed for over a year has increased by 11,000 (to reach 898,000 individuals).  Of these, 458,000 have been unemployed for more than two years, which is an increase of 7,000 on the previous quarter.

The employment rate (for adults aged 16-64) has fallen very slightly on the previous quarter, by 0.1 percentage points to 71.5%.  However, this is up 0.7 percentage points on the same period a year earlier.  The number employed has increased both on the previous quarter and on the year, by 24,000 and 432,000 respectively, to reach a total of 29.76 million.  That this has not resulted in an increase in the employment rate (when compared to the previous quarter) is due to the continuing significant growth in the total size of the UK working-age population and labour force (for the reasons noted by the IFS in the above summary). 

Earnings Estimates

Earnings growth remains weak and below the rate of inflation.  Total pay (including bonuses) increased by 1.3% between February-April 2012 and February-April 2013 whilst regular pay (excluding bonuses) increased by 0.9%.

Job Seekers’ Allowance Claimants

The number of Jobseekers’ Allowance (JSA) claimants in May 2013 fell on the previous month, by 8,600, whilst the rate was unchanged at 4.5% (but down 0.3 percentage points on the same month a year earlier).

Redundancies and Vacancies

In the three months to April 2013, 141,000 people were made redundant, up 9,000 from the previous quarter but down 14,000 from the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) in the period March to May 2013 increased by 19,000 on the previous quarter to total 516,000.  The number of ILO unemployed adults to every one vacancy in the three months to April 2013 was 4.9, down 0.2 percentage points on the previous quarter.

Key Regional Developments

·         Unemployment rates and levels fell compared to the previous quarter in the North West, by 0.8 percentage points and 28,000 individuals, whilst levels fell in Yorkshire and the Humber and the South East, by 2,000 individuals in both cases.

·         Unemployment increased significantly on the previous quarter in the West Midlands, by 19,000 and 0.8 percentage points, in the South West, by 12,000 and 0.4 percentage points, and in the North East, by 4,000 and 0.3 percentage points, whilst remaining flat or increasing very slightly in all other regions.  The unemployment rate in the North East remains the highest of the nine English regions, at 10.1%, followed by 9.4% in the West Midlands.

·         In the East Midlands, unemployment has increased very slightly, by 1,000 individuals and 0.1 percentage points, whilst employment has decreased more significantly, by 10,000 individuals and 0.6 percentage points.  The unemployment rate in the East Midlands for the period February to April 2013 is estimated to be 7.8%, in line with the UK average, whilst the employment rate is estimated to be 71%, below the UK average (of 71.5%).

·         The total size of the labour force (economically active adults), has continued to decline in the East Midlands, with the economically active population falling by 8,000 on the quarter, whilst the number who are economically inactive (neither in work nor unemployed ) has increased by 15,000 on the previous quarter.   This suggests that a significant number of individuals could be moving directly from employment to economic inactivity.

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[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.

May 2013 Labour Market Statistics Briefing

This morning, the Office for National Statistics published the monthly Labour Market Statistics (LMS) release for May 2013.   This contains Labour Force Survey data for the period January to March 2013 and Jobseeker’s Allowance (JSA) claimant count data for April 2013.  Despite the emphasis given in the media to the increase in unemployment (of 15,000 individuals) on the LFS measure compared to the previous quarter, the latest level of unemployment is lower compared to the same period a year earlier.  On balance therefore, this month’s release points to a flatter trend than indicated last month (where unemployed increased more significantly, by 70,000 on the previous quarter).  Unemployment on the more timely claimant count has also fallen slightly on the previous month.  This fairly flat picture is similar for the LFS measure of employment, which has fallen compared to the previous quarter but has increased compared to the same period a year earlier.

Despite these headline indicators appearing flatter compared to last month, there are a number of concerning trends within the data.   The numbers of adults unemployed for over one year and over two years have both increased.  However, the biggest story remains the very weak rate of earnings growth, with annual growth in regular pay remaining at the lowest rate since records began in 2001, at 0.8%.  Total pay, which includes bonuses, has fallen to 0.4%, the lowest since March to May 2008.

 With the Bank of England’s Quarterly Inflation Report also published today, confirming that inflation on the CPI measure has remained at 2.8% (for March 2013), these earnings estimates highlight the very significant squeeze on household incomes.  In his opening remarks at the press conference for the Inflation Report, the outgoing Governor Mervyn King noted that inflation has remained above its 2% target rate for much of the last five years, and earnings growth has remained lower than inflation throughout the last five years.  Furthermore, the Bank of England expect inflation to remain above 2% for the next two years – due to continued external price pressures (e.g. commodities like oil and food produce, imported goods and services and international energy prices) alongside “unusually large increases” in administered or regulated prices (e.g. tuition fees and the impact of increased UK-based energy suppliers’ contributions to the national grid on domestic energy prices).  Although the Governor argued that there was a “welcome change in economic outlook” behind the Bank’s more optimistic predictions for output growth, he also noted the continued weak labour productivity data (currently estimated to be at 2005 levels) which, alongside weak earnings growth, has been a consistent story since we published our first monthly briefing.

Unemployment and Employment Rates

LFS data for the three months to March 2013 indicate that the unemployment rate[1]  has increased by 0.1 percentage point on the previous quarter (the three months to December 2012), to 7.8% of the economically active population.  This is equivalent to an increase of 15,000 individuals.   However, compared to the same period a year earlier, the number of unemployed adults has fallen by 92,000, and the rate has also fallen by 0.4 percentage points.  The number estimated to be unemployed is currently 2.52 million.

The number of adults unemployed for up to six months has increased by 3,000 (to 1.19 million), whilst the number unemployed for over a year has increased by 23,000 (to reach 902,000 individuals).  Of these, 464,000 have been unemployed for more than two years, which is an increase of 21,000 from the previous quarter.

The employment rate (for adults aged 16-64) has fallen on the previous quarter, by 43,000 or 0.2 percentage points, to a rate of 71.4%.  However, this is 0.8 percentage points higher than the same period a year earlier, equivalent to an increase of 434,000 individuals.  The total number of people estimated to be in employment in the UK is 29.71 million.

Earnings Estimates

Earnings growth, which has remained weak for the five years since the onset of recession, is even weaker than reported last month.  Total pay (including bonuses) increased by only 0.4% between January 2012-March 2012 and January 2013-March 2013 (compared to 0.8% reported last month), whilst regular pay (excluding bonuses) increased by 0.8%.   The increase in regular pay is the lowest since comparable records began in 2001.

With inflation on the CPI remaining at 2.8%, prices are continuing to increase at more than twice the rate of earnings – illustrating the sustained squeeze on real household incomes. 

Job Seekers’ Allowance Claimants

The number of Jobseekers’ Allowance (JSA) claimants in April 2013 fell on the previous month, by 7,300, whilst the rate fell by 0.1 percentage points to 4.5% (and by 0.2 percentage points on the same month a year earlier).

Redundancies and Vacancies

In the three months to March 2013, 140,000 people were made redundant, down 5,000 from the previous quarter and down 32,000 from the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) in the period February to April 2013 increased by 11,000 on the previous quarter to total 503,000.  The number of ILO unemployed adults to every one vacancy in the three months to March 2013 was 5.0, unchanged from the previous quarter.

Key Regional Developments

·         Unemployment rates and levels fell compared to the previous quarter in the North West, by 0.5 percentage points and 18,000 individuals, but increased in all other English regions.

·         Unemployment increased most significantly in the West Midlands, by 0.6 percentage points and 16,000 individuals, and the South West, by 0.6 percentage points and 17,000 individuals.  The North East continues to have the highest unemployment rate of the English regions, at 9.8% of the economically active population, with the West Midlands now exceeding the rate of unemployment in Yorkshire and the Humber (at 9.2% compared to 9%).

·         In the East Midlands, unemployment has increased very slightly, by less than 1,000 individuals and 0.1 percentage points, whilst employment has decreased more significantly, by 19,000 individuals and 0.7 percentage points.  The unemployment rate in the East Midlands for the period January to March 2013 is estimated to be 7.8%, in line with the UK average, whilst the employment rate is estimated to be 70.8%, below the UK average (of 71.4%).

·         The total size of the labour force (economically active adults), has continued to decline in the East Midlands, with the economically active population falling by 19,000 on the quarter, whilst the number who are economically inactive (neither in work nor unemployed ) has increased by 20,000 on the previous quarter.   This suggests that a significant number of individuals could be moving directly from employment to economic inactivity.

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[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.

April 2013 Labour Market Statistics Briefing

This morning, the Office for National Statistics published the monthly Labour Market Statistics (LMS) release for April 2013.   This summarises data from the Labour Force Survey for the period December 2012 to February 2013 alongside Jobseekers’ Allowance claimant count data for March 2013 and recently released (28^th March, 2013) estimates of labour productivity and labour costs for the final quarter of 2012.

With the funeral of former Prime Minister Margaret Thatcher due to take place today, which has resulted in the cancellation of the weekly Prime Minister’s Questions (where the monthly employment statistics are often debated), media interest in this release may be more muted.  However, there is an important change in the data – an increase in unemployment, of 70,000 individuals compared to the previous quarter, which is significantly greater than the slight increase (7,000) reported last month. This has resulted in the unemployment rate increasing by 0.2 percentage points to 7.9%, equivalent to 2.56 million individuals unemployed but actively seeking work.   The employment rate has remained flat, although the number of people in employment has fallen slightly.

This is significant because, until last month’s release, unemployment had been falling quarter-on-quarter since autumn 2011.  Politically, this has been very important to the UK Government because the relative strength of the labour market has been used to counter criticism of their continued commitment to budgetary austerity.  In last month’s briefing, we drew attention to the emphasis placed by Ministers, including the Prime Minister, on continued falls in unemployment.

Alongside the increase in the headline unemployment measure, which has already been reported by the BBC, there have been a number of other developments that point to a possible deterioration in labour market conditions.  Since the start of Financial Crisis and subsequent recession, earnings growth has been consistently lower than the level of inflation (which was estimated to be 2.8% on the Consumer Price Index in March 2013).  The latest estimates suggest that earnings growth has now fallen to its lowest level since autumn 2009, with total pay (including bonuses) increasing by only 0.8% between the periods December 2011-February 2012 and December 2012-February 2013.

Finally, the latest labour productivity data adds to concerns that commentators have held for some time – productivity is continuing to fall although employment has remained relatively stable, meaning that unit labour costs may be becoming unsustainable for many firms.  The Bank of England’s Agents’ Summary of Business Conditions for April, also published this morning, suggests that the annual rate of growth in labour costs has increased slightly amongst Manufacturing employers, and that employers in both Manufacturing and Service sectors were under-utilising available capacity.  According to the quarterly estimates summarised in today’s LMS First Release, output per worker fell by 0.8% between the 3^rd and 4^th quarters of 2012 whilst unit labour costs increased by 0.5% over the same period.  Unit labour costs have now increased in all but one of the quarters since the 4^th quarter of 2010.

Unemployment and Employment Rates

LFS data for the three months to February 2013 indicate that the unemployment rate[1]  has increased by 0.2 percentage points on the previous quarter (the three months to November 2012), to 7.9% of the economically active population. The number estimated to be unemployed has increased by 70,000 on the previous quarter - to a total of 2.56 million.

A key driver in this increase in unemployment has been an increase in the number of people actively engaging in the labour market (i.e. available for work and actively seeking work).  Compared to the previous quarter, the number of people not in the labour force (known as ‘economically inactive’, including full-time students, full-time parents and carers, early retirees, those with work-limiting disabilities and discouraged workers) fell by 57,000.  The main component of this decrease was a reduction in the number of women who were economically inactive because of family commitments (child or elder care).  The number of women economically inactive because of family commitments has fallen to 2.1 million – the lowest figure since comparable records began in 1993.

The employment rate (for adults aged 16-64) has remained flat compared to the previous quarter, at 71.4%, whilst the number of people in employment has fallen slightly, by 2,000.  The total number of people estimated to be in employment is 29.70 million.

Earnings Estimates

Earnings growth, which has remained weak for the five years since the onset of recession, appears to be particularly weak according to the latest estimates.  Total pay (including bonuses) increased by only 0.8% between December 2011-February 2012 and December 2012-February 2013, whilst regular pay (excluding bonuses) increased by 1.0%.  This is lower than the growth reported last month (1.2% for both total and regular pay) and is the lowest annual earnings growth since September-November 2009.

With inflation on the CPI now estimated to be 2.8%, prices are therefore increasing at more than twice the rate of earnings – illustrating the sustained squeeze on real household incomes. 

Job Seekers’ Allowance Claimants

The number of Jobseekers’ Allowance (JSA) claimants in March 2013 fell on the previous month, by 7,000, whilst the rate remained unchanged, at 4.6% - although this is down 0.2 percentage points on the same month a year earlier.

Redundancies and Vacancies

In the three months to February 2013, 137,000 people were made redundant, down 21,000 from the previous quarter and down 37,000 from the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) in the period January to March 2013 increased by 1,000 on the previous quarter to total 495,000.  The number of ILO unemployed adults to every one vacancy in the three months to February 2013 was 5.2, up 0.1 on the previous quarter – due to the increase in the number of people unemployed.

Key Regional Developments

• Unemployment levels fell compared to the previous quarter in the North West and East Midlands, by 12,000 and 15,000 respectively.
• Unemployment levels and rates increased in all other regions, most significantly in the North East (by 12,000 individuals and 1 percentage point), London (by 30,000 individuals and 0.6 percentage points) and the South West (by 20,000 individuals and 0.7 percentage points).
• The North East continues to have the highest unemployment rate of the English regions, at 10.1% of the economically active population, followed by Yorkshire and the Humber, at 9.2%.
• In the East Midlands, both unemployment and employment fell compared to the previous quarter – with employment falling by 0.4 percentage points to a rate of 71%, below the UK average of 71.4%, and unemployment falling by 0.5 percentage points, to 7.7%, also below the UK average of 7.9%,
• This has happened in the East Midlands because of a decline in the total size of the labour force.  Individuals appear to have moved from unemployment to economic inactivity (with an increase of 26,000 in the economically inactive population), causing a decline in the unemployment rate and number.  Individuals also seem to have left employment and moved into inactivity, with 17,000 fewer people being in work.  

 

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[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.

March 2013 Labour Market Statistics Briefing

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 7^th 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[1]  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).

Earnings Estimates

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).

 

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[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.

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.

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[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.