Labour Market Report number 22 - January 2012

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Labour Market Report Number 22, January 2012

  • Unemployment rose to 8.4%, the highest level since 1995
  • There was another large rise in self-employment but evidence a suggests this may be due to labour market weakness
  • Pay growth at 1.9%

Employment and unemployment

The most recent labour market statistics cover September to November, when there were 29,119,000 people in employment. This was a rise of 18,000 on the quarter and 26,000 on the year. The employment rate for those aged 16 to 64 was 70.3%, a fall of 0.1% from the prior three months and of 0.2% on the year. The fall in the employment rate, despite a rise in the number of people in work, is explained by growth of the 16-64 population of 124,000 over the past year.

Unemployment, on the International Labour Organisation measure, rose by 118,000 on the quarter. The unemployment rate rose by 0.1% to 8.4%. This is the highest unemployment rate since 1995 and the largest number of unemployed people since 1994. The number of people out of work for over twelve months fell by 8,000 in the quarter to 848,000 (31.9% of all unemployed people). The number of people out of work for over twenty four months has risen by 92,000 to 420,000 over the past year.

The claimant count measure of unemployment rose by 1,200 to 1,597,000, an increase of 142,400 on the year. The claimant count has now risen for ten consecutive months.

The number of economically inactive people fell by 61,000 on the quarter to 9,293,000. There was a fall of 16,000 in the number of economically inactive people who want a job and a much larger fall of 46,000 in the number of economically inactive people who do not want a job. This is a somewhat unusual pattern as normally those who want a job are more likely to cease being inactive than those who do not want a job. It may reflect the squeeze on household incomes as previously inactive people return to the labour market.

Regional variations

The pattern of labour market change continued to vary across the various nations and regions of the UK. Unemployment is highest in the North East at 12.0% (a rise of 0.8% on the quarter) and lowest in the South East at 6.4% (a 0.5% rise on the quarter).

Unemployment fell in London, the South West, Wales and Northern Ireland in the most recent period but rose in every other region.

Young People

The number of unemployed young people rose by 52,000 in the quarter to 1,043,000, a new record high. The youth unemployment rose by 1.0% to 22.3%, a higher level than in the Eurozone. Excluding young people in fulltime education, the youth unemployment rose by 0.5% in the quarter to 20.7%.

Women

1,128,000 women were unemployed in the period (International Labour Organisation measure), the largest number since 1987. 531,500women are unemployed on the claimant count measure. In the past year the number of unemployed women (claimant count) has risen by 20.3%, nearly four times as quickly as the number of unemployed men (5.2%).

Vacancies

The provisional number of vacancies in October to December was 463,000, a fall of 2,000 on the quarter and 18,000 on the year. The ratio of unemployed people to vacancies rose to 5.8. As the chart below shows this is the highest level in 2 years and equal to the highest ratio since records began.

graph

Atypical work

Self employment rose by 101,000 over the quarter whilst the number of employees fell by 109,000. As the chart below demonstrates whilst the number of employees remains around 700,000 below pre-recession levels, the number of self employed people has risen by around 300,000.

The rise in self employment has helped hold down unemployment over the past year but the reasons behind it remain unclear. According to the Chartered Institute for Personnel and Development, 20% of the increase in self employment over the past year has come from unskilled workers often working as 'odd jobbers' picking up whatever work is available. The rise in self employment may therefore be further evidence of a generally weak labour market rather than sudden burst of entrepreneurial zeal.

graph

The number of involuntary part-time workers saying they could not find a full-time job rose by 44,000 on the quarter to 1,311,000, a record high. They represent 17% of all [part-time workers, also a record high. 29.5% of part-time men and 12.8% of part-time women workers want to be working full-time.

The number of temporary workers saying they could not find a permanent job rose by 10,000 in the quarter to 590,000. This represents 38% of all those on temporary contracts.

Average earnings growth

The annual growth rate of regular weekly pay (three month average) rose 0.1% to 1.9%, however the annual growth rate of weekly total pay (including bonuses) fell by 0.2% to 1.9%. Regular pay growth was strongest in finance and business services (3.5%) and weakest in the public sector (1.4%).

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