Jobless figures confirm ‘extreme fragility’ of labour market, CIPD

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The Government today welcomed the fall in ILO unemployment and youth unemployment, but said the overall figures also showed continued support was needed to secure the recovery. Ministers warned that further rises in unemployment were expected before the summer, and announced more help to get people back to work.

New figures published by the ONS show the overall ILO measure of unemployment has fallen for the second consecutive month, however the number of people claiming Jobseeker’s Allowance has increased.

The claimant count remains around 450,000 lower than expected last year and is at 5 per cent compared to 10 per cent in previous recessions. Around 70 per cent of claimants are still leaving Jobseeker’s Allowance within six months.

The figures are broadly in line with the Treasury projection in the Pre Budget Report that unemployment would rise in the New Year before falling again in the second half of 2010. In previous downturns unemployment increased for over a year after the recession had finished, however the Government believes that increased investment and changes in the labour market will help bring unemployment down faster this time.

Ministers believe the claimant count figures highlight the importance of continuing to increase help for the unemployed even as the economy starts to recover, rather than cutting it back. £3bn extra in 2010/11 will be invested to help the unemployed get back to work, up from £2bn this year.

Yvette Cooper, Secretary of State for Work and Pensions, said:

“These figures show how important it is to keep increasing not cutting back on the help for people to get work. Unemployment is much lower than expected last year, reflecting the tough decisions families and businesses have taken to protect jobs, as well as the substantial extra investment in getting people back to work. But we know things are going to be tough for a while and we expect further increases in unemployment before the summer. That’s why it’s so important to increase help for people now, not cut it back.”

New figures released today also show half a million unemployed people have got jobs through the Local Employment Partnerships (LEP) run by Jobcentre Plus, almost 200,000 of these since September 2009. The Government also announced a further 6,000 jobs under the Future Jobs Fund.

Minister for Employment and Welfare Reform Jim Knight said:

“It’s good news that despite the worst recession since the 1930s we have helped half a million people back to work through Jobcentre Plus’ flagship Local Employment Partnership scheme.

“Today we are also announcing the seventh round of winning Future Jobs Fund bidders which will create almost 6,000 more jobs for young people, bringing the total to almost 110,000.”

LEPs bring together employers from both the public and private sector to match people with jobs that become available in the local economy. Funded through Jobcentre Plus, the scheme has benefited from the extra £5bn Government is investing in helping people find work since the start of the recession.

Other figures published today show that around 14,000 people have benefited from the work focused training element of the new Six Month Offer, while the seventh round of winning Future Jobs Fund bidders will create almost 6,000 more jobs for young people. This brings the total number of successful bids to create jobs through the Fund so far to almost 110,000. Furthermore all young people out of work and claiming JSA for six months or more are now guaranteed a job, work focused training or work experience.

Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD) commented that:

“The latest unemployment figures show that conditions in the UK labour market remain extremely weak and indicate that talk of the jobless rate having already peaked is premature. Moreover, separate analysis by the ONS showing that 2.8 million UK workers are ‘underemployed’ shows that the headline jobless figures provide only a partial account of the full impact of the recession on the workforce.

“The 3,000 fall in unemployment on the Labour Force Survey measure for the period October-December is miniscule and must be seen in the context of a corresponding fall of 12,000 in the number of people in work and a rise of 72,000 in the number of economically inactive people. The latter rise is due mainly to a jump in the number of students – highlighting the degree to which young people are turning to study to avoid the dole.

“Most disappointing is the 23,000 January increase in the number of people unemployed and claiming jobseeker’s allowance, which comes after a short period in which the claimant count has been falling. January’s rise in the count is explained by a drop in the number of people flowing out of unemployment rather than an increase in fresh benefit claims, which suggests that recruitment activity weakened at the start of the year.

“Today’s employment and unemployment figures confirm that the UK jobs market is still in an extremely fragile state. New official estimates of ‘underemployment’ also show that the pain of the recession is much deeper than the headline numbers indicate. With a weak economic recovery set to result in further job losses in the coming months it is highly likely that the unemployment situation will get worse before it starts to get significantly better.”

Theresa May, the Shadow Secretary of State for Work and Pensions, has commented on new official figures showing that in the last quarter 2.8m people were underemployed, on top of the 2.6m unemployed.

“These figures show the devastating impact of Gordon Brown’s recession on families across the country”, she said.

Underemployment is defined by the Office of National Statistics as where a person wants to work more hours than is usual or stated in their current employment contract.

May said “Labour’s failure to set out a credible plan for growth could leave people struggling to find work for years to come”.

“Conservatives will invest in skills, infrastructure and jobs to tackle unemployment and get Britain growing again”, she added.

Key Facts: Background to labour market statistics: February 2010

This month’s Labour Force Survey covers October 2009 to December 2009. The claimant count and Jobcentre Plus vacancy count dates were 14th and 8th January respectively.

The number of people in work fell slightly this quarter

  • nearly 29 million people were in work in October to December.
  • employment level in October-December was 12 thousand lower than the previous quarter and 428 thousand lower than in the same quarter last year.
  • the employment rate is 72.4%, down 0.1 on the quarter and down 1.7 percentage points on the year
  • Number of workforce jobs is 30.9 million in September 2009, down 127 thousand on the quarter and 649 thousand on the year. ONS sees LFS employment as the best guide to short-term trends, and workforce jobs as providing the most reliable breakdown by industry.

The number of people on JSA rose this month but the number claiming other benefits is broadly flat:

  • claimant unemployment was 1,635.6 thousand in January 2010, up 23.5 thousand on the level in December, and up 381.8 thousand on the year.
  • the claimant unemployment rate, at 5.0%, is up 0.1 percentage points on the month and up 1.2 percentage points on the year.
  • inflows to JSA were 322.6 thousand in January, down 4.1 thousand on the month and down 7.3 thousand on the year. The number of people leaving JSA decreased to 330.6 thousand, down 20.9 thousand on the month and up 85.5 thousand on the year.
  • In the year to August 2009, the number of people claiming employment support allowance/incapacity benefits rose by 42,100 to 2.6 million. More recent provisional estimates suggest that there were 2.615 million claimants in December 2009, down on the month and slightly below the level in August 2009.
  • in the year to August 2009, the number receiving lone parent benefits fell 29,000 to 715,700. Provisional figures for December 2009 showed a small rise compared to previous months, though the underlying trend continues to improve, driven by the recent conditionality reforms.

ILO unemployment has fallen this quarter:

  • 2.46 million people were ILO unemployed in the October to December quarter, down by 3 thousand on the July to September period and up 448 thousand on the same quarter last year.
    the ILO unemployment rate is 7.8%, unchanged on the quarter and up 1.4 percentage points on the year.

The number of 18-24 year olds who are unemployed has fallen:

  • 725 thousand 18-24 year olds were ILO unemployed in the October to December quarter, this is down by 13 thousand on the July to September period and up 101 thousand on the same quarter last year.
    of the 923 thousand ILO unemployed under 25 year olds, 266 thousand are in full time education.
  • the number of unemployed under 25s in full-time education rose by 1,000 this quarter, but the number unemployed and not in full-time education fell by 15,000.
  • there were 492.9 thousand 18-24 year olds claiming JSA in January up by 7.7 thousand on the level in December and up by 109.9 thousand on the year.

The level of economic inactivity is up on the quarter and up on the year:

  • the economic inactivity level is 8.0 million, up 72 thousand on the quarter and up 241 thousand on the year.
  • the economic inactivity rate is 21.3%, up 0.2 percentage on the quarter and up 0.5 percentage points on the year.
  • the rise in inactivity over the last year is the result of more inactive students. Excluding students, inactivity as a proportion of the working age population is unchanged at 15.3% on the quarter and unchanged over the last year.

There are still many vacancies available, and the number of redundancies has fallen back this quarter:

  • there were 168 thousand redundancies in October to December, down 36 thousand on the previous quarter and down 94 thousand on the previous year.
  • ONS’s vacancy survey estimates an average of 479 thousand unfilled vacancies in the three months to January 2010, up 49 thousand on the quarter and down 24 thousand on the year.
  • in the last month Jobcentre Plus has taken on average over 10,000 new vacancies every working day and many more come up through other recruitment channels.

Total weekly pay in October-December was up by 0.8% over the year:

  • growth in regular weekly pay, excluding bonuses, was up 1.2% on the year

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