Labour Market Report #34

Number 34 February 2013

In this issue

Employment up 154,000, and

Unemployment down 14,000.

Regional labour market picture varies.

Wages continue to fall in real terms.

Employment and unemployment

The figures in the monthly release of labour market statistics from the Office for National Statistics are mainly drawn from responses to the Labour Force Survey over a three month period. The latest figures cover the period Oct - Dec; last month's were for Sep - Nov and so on.

On this basis, employment was 154,000 higher than in July to September; the 29,730,000 total was another record high and the 71.5 per cent employment rate was the highest since Jan - Mar 2009 (and up 0.3 points on the quarter).

Unemployment was down 14,000 on the quarter and the unemployment rate (7.8 per cent) was unchanged. Compared with last month's figures, however, unemployment was up 10,000 and the unemployment rate was up 0.1 points. This month's figures and last month's overlap, making this sort of comparison very susceptible to blips and changes that are quickly reversed.

The Claimant Count measure of unemployment produces monthly figures that are one month ahead of the LFS and the January figure (1,541,000) was 12,500 lower than December's. The latest edition of the Treasury's monthly round-up of forecasts by City economists, however, suggests that most expect the downward trend to cease: the average forecast for the 4^th quarter of 2013 is 1,590,000 and the average for the 4^th quarter of 2014 is 1,560,000.

While men's unemployment was down 16,000 on the quarter, women's was up 2,000. In the past 12 months, men's unemployment has fallen 127,000 but women's just 29,000. The number of men on the Claimant Count has fallen 67,000 over the past year while the number of women has risen by 3,000.

Youth (under 25) unemployment rose for the second month running and, at 974,000, is up 11,000 on the quarter. The number of young people who are not in employment or full-time education was up 1,000 on the month but down 5,000 on the quarter.

Long-term unemployment has fallen over the past quarter:

The number unemployed over 6 months is down 31,000;

The number unemployed over 12 months is down 15,000;

The number unemployed over 24 months is down 1,000.

The number of young people unemployed over 6 months, however, was up 1,000 on the quarter and 14,000 on the month.

Redundancies and vacancies

In the latest figures, the number of redundancies (145, 000) was up 17,000 on the quarter. Since the end of the recession, the number of redundancies in each three month period has averaged a little over 150,000, up from a little over 140,000 in the period before the recession. The number of unemployed people per job vacancy fell to 5.1, down from 5.2 in the previous quarter.

Regional variations

The latest regional data show a mixed picture, with unemployment rising in half of the regions: North West, W Midlands, South East and Wales. There were substantial reductions in unemployment in London (down 10,000 0.3 per centage points) and Scotland (13,000, 0.4 per centage points).

Employment rose in most regions but fell in Scotland, the North East and North West and Wales (substantially - by 14,000, 0.4 per centage points).

The increase in employment

There has been a real increase in employment in recent months. The Actual Weekly Hours Worked figures show total weekly hours in Oct - Dec at 947.1 million, up 1.8 million from the previous quarter and 23.7 million from 12 months ago.

But it is possible to over-state the employment gain. The chart below shows that the number of people in employment has grown by 584,000 over the past year, but this is inflated by atypical employment and government schemes. The increase in employees working full-time is 296,000 - hardly more than half the headline level.

Increase in employment, Oct-Dec 2011 to Oct - Dec 2012 (000s)

Total	584
Employees	373
Self employed	140
Unpaid family workers	3
Government supported training & employment programmes	69
Total people working full-time	394
Total people working part-time	190
Employees working full-time	296

Earnings growth and pay settlements

Total pay rose by 1.4 per cent in the year to December (three month average), down from 1.5 per cent from the year to November. The figure for regular pay, which excludes bonuses, is 1.3 per cent, down from 1.4 per cent.

The squeeze on real wages has now been continuous since the end of 2009, with the gap between wage increases and RPI inflation increasing in recent months:

According to Incomes Data Services, however, there are some indications that pay settlements are starting to rise (but still lag inflation). The IDS analysis of settlements in the three months to the end of January shows the median award for the whole economy at 2.5 per cent - up 0.5 per centage points on the previous month.

The inter-quartile range was 2.0 - 3.0 per cent.

The median for manufacturing was 3.55 per cent.

The median for private services was 2.8 per cent.

There were no public sector settlements recorded in the IDS database during this period.

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