Our labour market analysis

February 2017

Learning and Work Comment

The labour market figures published on 15 February are at first sight a set of positive figures. 

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

"The picture that emerges from the statistics released today is of a modestly improving labour market. In the last quarter of 2016, employment grew but at a much slower rate that we saw in the first half of the year, unemployment fell very slightly and the numbers of economically inactive (outside the labour market) fell after increasing recently. 

Standing in contrast with moderate positivity, was the large and unexpected fall in claimant unemployment in the month to January - down by over 40,000. This may be the product of Universal Credit having a different seasonal pattern over Christmas from Jobseekers' Allowance. So, the ONS seasonal adjustment of the 'raw' numbers might not be right. Alternatively, a number of commentators, including the Learning and Work Institute, have been drawing attention to some worrying signs that Jobcentre Plus might have been distracted from supporting individuals into work by the ongoing roll out of Universal Credit. Jobcentre Plus will have seen those signs themselves and may now be taking action ."

Employment rose by 37,000 between July to September 2016 and October to December 2016. In the last 12 months, employment has grown by 302,000. 

Unemployment fell by 7,000 between July to September 2016 and October to December 2016, and the unemployment rate remained at 4.8%, the lowest level since 2005. 

Economic inactivity fell by 31,000 between July to September 2016 and October to December 2016, and the inactivity rate fell 0.1 percentage points to 21.6% in the quarter. 

The very large 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 22,100 in the month to January, compared to the adjusted fall of 42,400. Therefore, it should not be surprising that figures for local areas will show rises. 

The proportion of people leaving the claimant count (or the ‘leavers rate’) has risen. At 17%, it remains 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. 

Youth unemployment is showing a quarterly fall. There are still 568,000 unemployed young people, and 369,000(5.2% 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 50.4%. 

A total of 86,000 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 rose 21,000 this quarter. Self-employment rose 13,000 this quarter and equalled the record proportion of employment at 15.1%. Employee numbers did not change in the quarter. Involuntary part-time employment fell this quarter by 30,000 to 1.1 million, 13.3% of all part-time workers.The proportion remains much higher than the 7.4% in 2004.

Key Facts

  • Unemployment is 1,597,000, down 7,000 from last month’s published figure (quarterly headline also down 7,000) and the unemployment rate is 4.8%, no change on last month and no change on last quarter.
  • The number of claimant unemployed is 745,000, down 42,400 on last month, and the claimant rate is 2.1%.
  • The number of workless young people (not in employment, full-time education or training) is 1,004,000, down 18,000 on the quarter, representing 14% of the youth population (down 0.2 percentage points).
  • Youth unemployment (including students) is 568,000, down 23,000 on the quarter.
  • There are 2.1 unemployed people per vacancy. Learning and Work Institute estimates this figure may fall next month.
  • The employment rate is 74.6% (up 0.1 percentage points on last month’s published figure and up 0.1 percentage points in the preferred quarterly measure).