Wednesday, 14 March 2012

March 2012 Labour Market Statistics Briefing

On the 14th of March, the Office for National Statistics published both the latest monthly Labour Market Statistics and the estimates of Public Sector Employment for the final quarter of 2011.  The Labour Market Statistics includes Labour Force Survey data for the period November 2011 to January 2012 and Jobseekers’ Allowance data for February 2012.  The data indicates an increase in the International Labour Organisation (ILO) measure of unemployment to the highest level since November 1995.  However, for the third consecutive release, there has been a slight increase in the numbers in employment - which was principally driven by an increase in part-time employment (with the number of self-employees falling).[1] 

Public sector employment in the final quarter of 2011 is estimated to be 270,000 lower than the same period a year earlier. The largest share of job losses was estimated to be from local government (down by 204,000 on the same period a year earlier).[2]

Compared to the broadly optimistic reaction from city analysts and political commentators to last month’s release, reactions this month appear to be more muted, with many analysts accepting that a significant improvement in labour market conditions appears unlikely in the short-term.    The Guardian ran a feature contrasting the views of various analysts, in which most emphasised the current high level of unemployment in the UK and the consistently poor figures over previous months – characterised by significant falls in public sector employment and only weak increases in private sector jobs (Blerina Uruci, Barclays Capital).  Furthermore, a  number of these analysts appeared to agree that a fall in unemployment was unlikely until early 2013 (e.g. Nida Ali, Ernst & Young Item Club). 

The Government has continued to argue that the data is “encouraging”  - with Employment Minister Chris Grayling MP identifying “signs that the labour market is stabilising” in an interview with the BBC.  In criticising the Government’s presentation of the latest data, organisations such as the TUC have drawn attention to the recent increases in individuals working part-time because they have been unable to find full-time employment, suggesting that this provides evidence of persistent underlying weaknesses in the UK labour market.  These developments are explored in more detail below.

Unemployment and Employment Rates
LFS data for the three months to January 2012 suggests that the unemployment rate has increased by 0.1 percentage point on the previous quarter to reach 8.4% of economically active adults in the UK overall.[3]   The ONS note that this rate is the highest since the three months to November 1995.  However, the increase in the number of unemployed on the previous quarter, at 28,000, has been lower than increases reported in previous Labour Market Statistics (and is the lowest quarterly increase since the three months to May 2011).  This is the development that has led Government spokespeople to argue that the trend in unemployment could be stabilising.  However, it is important to note that the level of unemployment  -  at 2.67 million individuals - is higher than at any point in 2011.

A strong message in the latest data, as reported by the BBC, has been the increase in unemployment amongst women.  The number of unemployed women in the three months to January 2012 increased by 22,000 on the previous quarter, compared to an increase of 5,000 for unemployed men.  Although men still make up the majority of ILO unemployment (1.54 million), women have accounted for the largest share of recent increases in unemployment.  This could well be associated with the significant falls in public sector employment, described below, which accounts for activities where women are known to be overrepresented (e.g. local government, health and education).

The employment rate remained unchanged compared to the previous quarter, at 70.3%.  The number of people employed increased by 9,000 on the quarter to reach 29.12 million (although this is still 44,000 lower than the same period a year earlier).   This slight increase on the quarter was mainly due to 60,000 more employees working part-time.  Alongside a small increase in full-time employees of 3,000, this increase in part-time working compensated for a significant fall in self-employment of 52,000 and a small fall in unpaid family workers.   As reported in last month’s briefing, a high and growing number of individuals (1.38 million) state that they are working part-time because they have been unable to find full-time work.

Public Sector Employment
The separate release of Public Sector Employment estimates for the final quarter of 2011 strongly suggests that local government employees have borne the brunt of public sector job cuts.  In the fourth quarter of 2011, total public sector employment was 270,000 lower than the same period a year earlier – at 5.94 million.  Local government employment was 204,000 lower than in the final quarter of 2010 (a decrease of 7.1%), compared to a fall of 34,000 in central government, including the NHS (1.2%), and a fall of 32,000 in public corporations (6.1%).

Job Seekers’ Allowance Claimants
The proportion of Job Seekers’ Allowance (JSA) claimants in the UK in February 2012 was 5.0% of adults aged 16 and over, which is unchanged from the previous month but is 0.5 percentage points higher than the same period a year earlier.  This is equivalent to 1.6 million adults claiming JSA across the UK, up 7,200 from January 2012 and up  162,100 on the same period a year earlier. 

Redundancies and Vacancies
In the three months to January, 173,000 people had become redundant, up 11,000 from the previous quarter and up 30,000 from the same period a year earlier.

The number of vacancies (advertised through Jobcentre Plus) has increased slightly in the three months to February 2012 by 15,000 to reach 473,000.  However, this is still 20,000 lower than the same period a year earlier.  

Key Regional Developments
·         Although the number in employment increased in the UK overall, numbers fell significantly in the North West, the East Midlands and London, by 51,000, 25,000 and 27,000 respectively.  The South West was also estimated to have experienced a slight fall in total employment, by 6,000.  The employment rate was highest in the East of England (74.7%) and lowest in the North East (66.5%).
·         The North East continues to have the highest unemployment rate of the nine English regions, at 10.8%.  However, compared to the previous quarter, unemployment increased by most in the North West, by 16,000 individuals and 0.6 percentage points, to a rate of 9.3%.
·         In the East Midlands, unemployment increased by 5,000 (or 0.3 percentage points) to a rate of 8.2%, which remains below the UK average of 8.4%, whilst the employment rate remains above the national average (at 71% compared to 70.3%).

[1] ONS Crown Copyright. 14 March 2012. ‘Labour Market Statistics: March 2012’.  TSO: London.
[2] ONS Crown Copyright. 14 March 2012. ‘Public Sector Employment – Q4 2011’.  TSO: London.
[3] According to the International Labour Organisation (ILO), this is defined as those who are out of work but available for, and actively looking for, employment within a set period.  This is expressed as the proportion of ‘economically active’ (employed plus unemployed) adults.