Labour market weakness continues – while help for long-term unemployed is cut

Today's labour market statistics show that there should be real government concern about the direction that our labour market is taking, reports Nicols Smith.

Today’s labour market statistics show that there should be real government concern about the direction that our labour market is taking. Cuts are starting to make a difference to working people’s employment prospects, and, with short-term unemployment starting to rise again, future prospects for jobs look extremely uncertain.

The quarterly employment levels look good – a rise of 178,000. But a closer look at the data shows that on the month, between June and July, the employment level held steady.

The proportion of people in part-time jobs because they can’t find full-time work is now the highest on record (since 1992) with 14.6 per cent of part-time workers (1,137,000 people) in this position, and while the number of full-time jobs rose on the quarter (35,000) it fell significantly on the month (31,000).

Unemployment by the International Labour Organization (ILO) measure has fallen, on the month (19,000) and on the quarter (20,000). But this positive change is mainly accounted for by an improvement in unemployment levels among 16-17 year olds. In addition, the claimant count, a more recent measure (with data available up until September) has gone up again, with a 5,300 monthly rise.

The claimant data also shows an extremely concerning rise in new claims – an increase of 16,000 in claims of 0-6 months between August-September with the number of new claims having risen consistently since June. A small consolation is that this trend is not yet reflected in the ILO data, which shows a small quarterly fall in short-term unemployment (2,000) and a monthly drop of 15,000.

But this trend is not replicated across the population: for young people, short-term unemployment is going up and the picture is starting to look grim. For 18-24 year olds unemployment of up to six months is up 45,000 on the quarter (and 2,000 on the month) and long-term unemployment has jumped 16,000 on the quarter (as well as on the month).

There are now 208,000 young people in the UK who have been unemployed for more than 12 months (the highest level since October 1994). The abolition of the Future Jobs Fund will not have helped these young people, whose future prospects are worsening every day they spend out of the labour market.

Women’s unemployment is also an increasing cause for concern. Short-term female unemployment has risen on the quarter (17,000) compared to a quarterly fall (-19,000) for men, and overall levels of unemployment for women are up significantly (36,000), again compared to quarterly falls for men (56,000).

On the year, female unemployment is up 77,000, compared to an annual fall of 100,000 for men. The gap between male and female unemployment is still significant (there are 423,000 more unemployed men than women, and more men have lost their jobs during the recession than women) but the gap between the two levels is now the smallest that is has been since January 2009.

Involuntary economic inactivity also is up – by a lot. There are now 1,352,000 women and 1,053,000 men who are economically inactive but want a job. This is a monthly rise of 38,000 for women, and 5,000 for men. Vacancies have continued to fall, and have now been heading downwards since the April-June quarter (the most recent data are for July-September).

Despite Iain Duncans Smith’s assertion that 500,000 incapacity benefit claimants could move into work tomorrow, and Chris Grayling’s assessment that there is “no reason for anyone in London to claim they cannot find employment” the reality is that there are now only 459,000 vacancies nationally, a drop of 30,000 on the quarter and 8,000 on the month, and that there are 5.2 jobseekers for every job in the economy (and that is before the growing numbers of people who are economically inactive but want to work are included).

The impact of the cuts is visible here – some of the largest vacancy falls have been in education (down 17,000 on the quarter) and public admin has also seen a drop (down 5,000 on the quarter, but 17,000 on the year) with health and social work vacancies remaining stagnant at around 62,000.

Interestingly, at the time of writing, the Department for Work and Pensions have yet to issue a formal press reaction to today’s figures. But a Chris Grayling statement is doing the rounds on PA – claiming that employment is still rising (technically correct on the quarter, but not on the month), pointing out that the government is reassessing incapacity benefit claimants and claiming that next year’s Work Programme (which will come in at the point at which many young people will already have spent more than two years out of work) will help those facing long-term unemployment.  This is an inadequate response.

These statistics show that tackling unemployment needs to be a top government priority – simplification of the benefits system is a worthy goal, but not one that should be pursued at the expense of the hundreds of thousands of people who are facing unemployment now. The government needs to tone down its attacks on those who are out of work, and step up to the challenge of helping them find jobs.

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