Labour market stats reveal high unemployment and an uncertain outlook

Today's figures show that while the recession technically ended over a year ago the period November-January 2011 saw unemployment hit its highest level since October 1994 - 2,529,000 people.

Today’s figures show that while the recession technically ended over a year ago the period November-January 2011 saw unemployment hit its highest level since October 1994 – 2,529,000 people.

Eight per cent of working age adults in the UK now report that they are unemployed, with practically the same number again reporting that while they are economically inactive they would like a job – 2,359,000 people. The number of vacancies showed a small fall (5,000) on the month, with only 496,000 vacancies across the economy in the three months to February 2011.

What’s more, this total still includes temporary census jobs; excluding census posts there were 467,000 jobs available. There are still five unemployed people chasing every job, and in some parts of the country – as our analysis of claimant unemployment data and Jobcentre notified vacancies has shown – the picture is far worse.

Public sector employment has fallen 132,000 on the year. Given that the bulk of the chancellor’s spending cuts won’t kick in until April 2011 this raises questions about the accuracy of the Office for Budget Responsibility’s forecasts – more than a third of the total drop in public sector employment (330,000) they forecast over the next four years appears to already have taken place.

On the question of whether the private sector can close the jobs gap the jury is still out. Private sector employment is up annually – by a positive-looking 428,000 – leading to an increase in overall employment of 296,000 on the year. But the sorts of jobs that have been created do not suggest a strong labour market recovery:

• 114,000 (39 per cent) are self-employed jobs;

• 12,000 (4 per cent) are unpaid family workers;

• 11,000 (4 per cent) are positions on Government supporting employment programmes;

• 206,000 are part-time (70 per cent); and

• Only 65,000 are full-time employee positions (22 per cent).

Today the Department for Work and Pensions chose to emphasise the positives – a quarterly 111,000 rise in full-time employee jobs resulting from large monthly rises between October-November (68,000) and November-December (57,000). But overall employment increased by far less, showing a smaller 32,000 rise on the month.

The difference is a result of quarterly falls in part-time employee jobs (-43,000) and in people undertaking full-time self-employment (-34,000). The scale and speed of the private sector jobs recovery remains extremely uncertain and with the private sector set to experience further job losses as the cuts start to bite in April there is no guarantee strong employee jobs growth will continue.

Economic inactivity levels are starting to show large increases – 31,000 on the quarter for women and 12,000 for men. However, these top line figures hide wider trends:

• A 35,000 increase in the number of women saying they are looking after a home or family;

• A 22,000 increase in the number of men who report they are long-term sick; and

• A 30,000 increase in the number of working age women who report they are retired.

Rises in female economic inactivity over 2010 mean that levels are now the highest they have been since 1996.

Youth unemployment is high and rising. Among 18-24 year olds unemployment rose 23,000 on the quarter and 5,000 on the month between November and December. Both young men and young women saw rising unemployment rates and levels – although on the month young women saw a 9,000 rise compared to a 4,000 fall for young men – with the male rate now 19.9 per cent compared to 16.4 per cent for young women. Both rates are unacceptably high – and for women are the highest recorded (since 1992); young men last saw rates this high in late 2009 and in the early 1990s.

The fall in the claimant count is welcome – although not everyone leaving benefits will be moving into work, some will simply have reached the end of their entitlement (should they only qualify for six months of contributory JSA) – and takes levels of claimant unemployment to their lowest since early 2009. But levels remain close to double those we saw before the recession, and with large amounts of Jobcentre support about to be cut, and the strength of the economic recovery extremely uncertain, it is too early to tell whether future months will see further falls.

It’s fair to say that today’s figures presented a mixed picture; but there is far more cause for concern than celebration. Next week’s Budget is a chance for the chancellor to produce a strategy to secure the recovery and invest in jobs and growth.

Our fear is that without a re-assessment of the scale and speed of his spending cuts high unemployment could become a permenant feature of the UK’s economy.

7 Responses to “Labour market stats reveal high unemployment and an uncertain outlook”

  1. Mr. Sensible

    Incidentally Nicola, you refer to the number of women who are economically inactive, and the 35000 increase in those saying they are looking after a home or family.

    The news yesterday looked at changes to working tax credit, with suggestions on Netmums that I think 50% of members would consider either giving up work or cutting their hours.

    Quite apart from this being the latest effort to normalize the nuclear family by stealth, what does this do for A reducing unemployment, and B making work pay, which is meant to be the aim of the current welfare reforms?

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