Our labour market analysis

December 2016

Learning and Work Comment

The latest labour market figures published on 14 December are the third consecutive monthly set of disappointing figures. It is clear that the UK labour market is now slowing. 

Duncan Melville, Chief Economist at Learning and Work Institute, commented: 

"Today's figures do show a fall in unemployment in the three months to August to October 2016, but unemployment was up in the latest month. The claimant count measure of unemployment has been rising since February and has risen by over 70,000 since then. Employment fell in both the quarter and the latest month. The level of vacancies has been flat at around 750,000 since the spring of this year. Hence unemployment did not fall in the quarter as a result of improved employment opportunities. 

Rather increasing numbers of people are withdrawing from the labour market into economic inactivity. The number of people of working age (16-64 years) who are economically inactive has risen by around 100,000 in the last two months. It is concerning that unemployment is falling not because of an improving labour market but because people are withdrawing from the labour market. With continuing uncertainty over how the UK will exit the EU, it is unlikely that we will see a pick up in hiring by employers any time soon. As we approach the end of the year, the unfortunate prospect for 2017 looks likely to be one of rising worklessness and at best modest employment growth." 

Employment fell by 6,000 between May to July 2016 and August to October 2016. In the last 12 months employment has grown by 342,000. 

Unemployment fell by 16,000 between May to July 2016 and August to October 2016. and the unemployment rate fell 0.1 percentage points to 4.8% in the quarter the lowest level since 2005. 

Economic inactivity rose by 76,000 between May to July 2016 and August to October 2016. and the inactivity rate rose 0.2 percentage points to 21.7% in the quarter. 

The small rise 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, fell by 7,200 in the month to November, compared to the adjusted rise of 2,400. Therefore, it should not be surprising that figures for local areas will show falls compared to the national picture. 

The proportion of people leaving the claimant count (or the ‘leavers rate’) has risen. At 17%, it is still well below the level in early 2015 of 20.7%. The number of new claims has fallen. Jobseeker’s Allowance off-flow rates for JSA claimants of short durations increased. Off-flow rates remain at historically high levels. 

The number of young people who are neither in employment nor in full-time education is now clearly rising. Over the last five months this has risen by 26,000 from a low of 1.014 million to 1.039 million. This rise has entirely been in those counted as inactive. The percentage of young people engaged in full-time education is almost the same as then (February to April 2016). 

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 56.6%. 

A total of 68,000 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 12,000 this quarter. Self-employment fell 2,000 this quarter. Employee numbers fell 6,000 in the quarter. Involuntary part-time employment rose this quarter by 5,000 to 1.2 million, 13.8% of all part-time workers. The proportion remains nearly double that in 2004 (7.4%).

Key Facts

  • Unemployment is 1,616,000, up 12,000 from last month’s published figure (quarterly headline down and the unemployment rate is 4.8%, no change on last month and down 0.1 percentage points on last quarter.
  • The number of claimant unemployed is 809,000, up 2,400 on last month, and the claimant rate is 2.3%.
  • The number of workless young people (not in employment, full-time education or training) is 1,039,000, up 10,000 on the quarter, representing 14.5% of the youth population (up 0.2 percentage points).
  • Youth unemployment (including students) is 587,000, down 34,000 on the quarter.
  • There are 2.1 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise next month.
  • The employment rate is 74.4% (down 0.1 percentage points on last month’s published figure and down 0.1 percentage points in the preferred quarterly measure).