The bad news in yesterday’s employment stats (and it’s not about migration)

The claim that migrants are disproportionately accessing jobs in Britain compared to workers of UK nationality is based on a simple misreading of the statistics.

Yesterday’s monthly labour market statistics (pdf) from the Office for National Statistics (ONS) were bad news; not disastrous, but bad enough to spark serious concerns about the direction of the UK labour market.

They were particularly disappointing because the previous month’s figures (pdf) had shown what looked like a promising fall in unemployment: the working age unemployment rate had fallen to 7.8%, the first time it had moved outside the range 7.9-8.1% since the spring of 2009.

In contrast the figures for March-May showed the working age unemployment rate rising back to 7.9%.

The very slight numerical fall in unemployment which dominated yesterday’s headlines can be discounted; what is important is the return of the unemployment rate to its earlier value, which means unemployment in the UK has essentially been oscillating around 8% for the last two years.

To avoid confusion, this is the unemployment rate for those aged 16-64: ONS also reports the unemployment rate for all economically active people over 16, which is slightly lower, and to add to the confusion, Eurostat uses a different base again- see below.

To see why this stability of the unemployment rate is worrying, Graph 1 below shows unemployment from 1971 up to yesterday’s figures. We have to go back to the mid 1980s to find a period when unemployment rose and then stabilised at its higher rate for a comparable length of time.

As of the present moment, unemployment in the UK looks frozen: we have yet to see any sign of a downward trajectory.

Graph 1:

ILO-unemployment-age-16-64-from-1971-2011
This should be a source of concern, not grounds for apocalyptic prophecies. Every recession is different and it remains the case that unemployment rose much less during this recession than was widely expected given the collapse in output.

This month’s downturn may just turn out to be a blip in the downward trend we have been waiting for. But the absence of any real signs of labour market recovery in the UK contrasts with the picture in a number of comparable economies.

The figures in Graph 2 below from Eurostat, which run from June 2010 to April this year, show that the stability of UK unemployment is not a general pheneomenon across wealthy economies. (Note that the population base is different for these figures).

Graph 2:

Change-in-unemployment-age-16-64-June-2010-April-2011
There were other worrying signals in yesterday’s figures. It is striking that while male unemployment is far lower now than in the early 1990s, at 6.3% compared to a peak of 10.7% in late 1993, female unemployment at 6.1% is only one percentage point lower than it was then.

The long term unemployment rate (24 months or more) has more than doubled since the summer of 2008 and has shown a particularly sharp upward trajectory over the last year. Flows on to Jobseeker’s Allowance have substantially exceeded off-flows since March, in contrast with most months last year.

With all of these negatives to focus on in yesterday’s figures, what did the Daily Mail choose to highlight?

‘Iain Duncan Smith was RIGHT: Foreign workers took three in four new jobs in Britain in the last year’

– Number of foreign men and women in work soars by 334,000 to over 4 million

– British-born workers finding employment in same period rose by only 77,000

Now anyone reading this might be under the impression that only 77,000 ‘British-born’ workers got a job last year, compared to 334,000 ‘foreign workers’. So it’s worth pointing out that even with unemployment remaining stable, some four million people left the claimant count last year, most of them for jobs, and they represent only a fraction of people moving from unemployment into work.

Sir Andrew Green, chairman of MigrationWatch UK, said:

“It is impossible to look at these figures which show a substantially greater increase in the foreign-born workforce than in the British-born workforce without deducing that there has been a significant impact on the prospects for British workers.

“There is no point in being in denial about this.”

In fact, it is perfectly possible to look at the figures without leaping to any such deduction, and without being ‘in denial’. Table 1 below shows why.

It doesn’t cover the same period as yesterday’s figures because ONS haven’t published the relevant data yet, but it illustrates the importance of a factor which rarely gets mentioned in these contexts, which is economic activity – basically, whether people are in the labour market or not.

Between 2009 and 2010 there was virtually no change in aggregate working age employment – along with a huge amount of turnover within this stable total, as we have seen – but for UK nationals of working age total employment fell by nearly 50,00 and non-UK nationals’ employment increased by 45,000.

Was this because migrants were crowding UK workers out of jobs? Hardly, because economic activity among UK nationals fell 42,000 over the same period. In fact, the change in the balance of UK national and non-UK national employment pretty much corresponded to the change in the numbers of economically active people in each group.

Table 1:

Economic-activity-and-employment-Jan-Dec-2009-Jan-Dec-2010
The claim that migrants are disproportionately accessing jobs in the UK labour market compared to workers of UK nationality is based on a simple misreading of the statistics.

Nonetheless, the combination of a stagnant labour market and commentators eager to voice their know-nothing insights at every available opportunity means we can expect to hear these claims with numbing regularity for some time to come, every time the monthly labour market statistics are released.

59 Responses to “The bad news in yesterday’s employment stats (and it’s not about migration)”

  1. Leon Wolfson

    Anon – Unlike you, I can read a map. And even the office of budgetary fiddling agrees immigrants are economically positive.

    “If there were all these “hostilities” as you describe why would they come here?”

    …Economics. Thanks for proving my point with your hostility, though. More, many are NOT entitled to benefits (but pay NI anyway). And of course, your party has banning *skilled* workers coming here, hurting the economy.

    Priorities, I understand. Xenophobia > Fixing the country.

  2. scandalousbill

    Anon,

    You say:

    “…whilst I accept that they earn less on average than UK Nationals (and more than me incidentally) they are also entitled to benefits and send a large proportion out of the country which does not benefit this country one bit.”

    First point, if they are employed, they are making tax and NI contributions not collecting benefits. As tax payers, they would be entitled to do so should their employment situation deteriorate. Unless you can provide some evidence to show that they are doing both simultaneously, you position is fallacy. The fact they use their remaining disposable income to help out their relatives or friends from their homeland, as opposed to buying DVDs, going to a pub or restaurant, etc., is really a red herring.

    A second point you may wish to consider is, that if the contentions of the right wing media, IDS, Migration Watch et al assert has any grounding, namely, that the vast majority of jobs created has gone to immigrants, then the persistence of these groups income trailing the national average wage could indicate the low quality of the jobs created by the Tory lead coalition. BTW manufacturing, while still not a major contributor to UK GDP, has been a growth area, particularly in the Midlands, (Birmingham, Coventry and area).

  3. Anon E Mouse

    Leon Wolfson – I don’t know if you’re joking to be honest but assuming you’re not please tell me where I have been “hostile” towards any immigrant and when you can’t, (because I haven’t) please apologise for attempting to misrepresent my position.

    We may have disagreements on many things but at no point have I ever made any disparaging comment towards you despite the ease in which I could do it considering your support of a highly hypocritical political party.

    Please extend me the same courtesy.

  4. Anon E Mouse

    scandalousbill – That red herring you describe sends money from this country which benefits those overseas. A close Indian friend of mine does exactly that month on month.

    As for the jobs situation you are just making statements and not considering for example that when the boarders were opened to the Poles, despite the warnings, unemployment went up hugely amongst the indigenous population.

    This unemployment situation has arisen for the last 20 years and why as a country we accept it is OK for people not to do jobs and to believe that say Pakistanis should do them is racism surely.

    People benefit from work and should be encouraged to take any job they can do. Every politician knows it but to accept 1.7 million jobs that could be done by Brits aren’t being is just crazy…

  5. Leon Wolfson

    Mouse – Except you have. Because those hostilities you claim don’t exist have affected me, multiple times.

    And you keep on making these claims…in your last post about Poles…you’re quite clearly both bitter and xenophobic. The UK does not accept unskilled labour from outside the EU, so the same applies to your claim about Pakistanis – it’s a good old fashioned Tory attack!

    Never mind, I’m sure you have more ideas about further slashing the UK’s educational system (which will lead to EU graduates taking more jobs here) and increasing inequality (since we’re bleeding, to other countries, vital mid-wage jobs – and the Tories have managed to destroy the prospects of several industries here entirely, like the Games Industry).

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