February 20, 2015 7:29 pm Published by

The labour market figures published on 18 February suggest that a degree of renewed momentum has returned to the labour market following the slowdown we have noted in previous months.

Duncan Melville, Chief Economist at Inclusion, commented:

“Employment is up by 103,000 in the three months to October to December 2014, higher than the average quarterly increase seen over the previous six months. The employment rate (the proportion of people of working age in employment) has risen to equal the highest figure since records began in 1971, albeit part of the reason for this reflects the rise in the pension age for women from 60 to 65. The fall in unemployment, 97,000, seen in the latest figures is also an increase on recent months. A troubling sign is the increase in economic inactivity amongst people of working age which rose by 22,000 in the quarter. Overall, however, with vacancies at record highs and the ratio of unemployment to vacancies in October to December 2014 falling again to half the level seen two years previously, it is clear that greater buoyancy has returned to the UK labour market.

Looking below the aggregate level the picture for young people has worsened again with a rise in the number of young people not in employment, full-time education or training in the three months to October to December 2014, despite the overall improvement in the labour market. More positively, the number of new claims for JSA and the proportion of JSA claimants staying on benefits for three, six, nine and twelve months continues to fall. The latest data for flows between unemployment and employment from the Labour Force Survey show a continuing increase in the proportion of the unemployed moving into work in three months to around 27%, up from the low of around 20% seen in early 2010, but below the pre-recession highs of 30%. This does suggest that the movements off JSA are mainly positive ones into employment, which is to be welcomed.”

Employment increased by 103,000 in the quarter. In the last 12 months employment has grown by 608,000 which continues to be a strong yearly increase by historic standards.

Unemployment fell by 97,000 in the quarter, and the unemployment rate at 5.7% is back to levels last seen in the summer of 2008. The unemployment rate is, however, still above its pre-recession levels.

The fall in the claimant count takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, rose by 29,100 between December and February, compared to the adjusted fall of 38,600. Therefore, it should not be surprising that figures for local areas will show rises compared to national falls.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has risen. At 18.8%, it remains below the pre-recession level of 21.2%. The number of new claims has fallen sharply but Jobseeker’s Allowance off-flow rates for JSA claimants of all durations worsened. Off-flow rates remain at historically good levels.

Youth unemployment is showing a small quarterly rise. There are still 740,000 unemployed young people, and 498,000 (6.8% of the youth population) who are unemployed and not in full-time education.

The proportion of unemployed young people (not counting students) who are not claiming Jobseeker’s Allowance and therefore are not receiving official help with job search is now 53.6% and has risen by over 20 percentage points since October 2012. Whether this rise is due to the new JSA sanctions regime (which started then) remains unproven.

A total of 113,000 people were counted as in employment while on ‘government employment and training programmes’, where the Office for National Statistics continues to count Work Programme (etc.) participants as ‘in employment’ by default. This number fell 10,000 this quarter. Self-employment fell 19,000 this quarter but remains at a high proportion of employment. Employee numbers rose 154,000 in the quarter. Involuntary part-time unemployment is slowing. There was a slight fall this month to 16.1% of all part-time workers, however the proportion remains double that in 2004.



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