Search

PDF version available for download (PDF help)

Labour Market Report

Number 2, April 2010

• Between Dec 09 - Feb 10 2,502,000 people were unemployed by the ILO measure, this was up 43,000 on the previous quarter (Sept - Nov 09) and up 369,000 annually.
• In contrast, the claimant count has shown significant falls between each of the last two months - 40,000 between Jan 10 and Feb 10, and 32,900 between Feb 10 and Mar 10. A revision to last month's ONS data has shown that between Dec 09 and Jan 10 the claimant count increased by 16,200. It may be this rise in unemployment is reflected in the most recent ILO figures.
• Unemployment of over 12 months is rising while unemployment of under 6 months continues to fall - a likely impact of off-flows into work remaining constant while the rate of in-flows (job losses) reduces. This can be seen below:

Unemployment of less than six months (LHS) and more than 12 months (RHS), Q2 1992 - Q4 2009 (000s)

• Redundancies are continuing to fall (20,000 on the quarter), but vacancies also showed a small reduction of 7,000 between the Dec 09-Feb 10 and Jan 10 - Mar 10 rolling quarters, although on the calendar quarter they rose by 9,000.
• Employment is yet to show a recovery. While the monthly falls are no longer of the scale we saw at the height of the recession, they remain significant - a drop of 45,000 people in work between Nov 09 to Dec 09, and 36,000 between Dec 09 - Jan 10. As employment levels have fallen, levels of involuntary temporary work (those who would rather have a permanent job) and of involuntary part-time work (those who would rather be in full-time jobs) have continued to rise. This is shown below:

Employment (LHS) and involuntary temporary and part-time employment (RHS). Q2 1992 - Q4 2009 (000s)

• The only areas of the economy showing quarterly growth in workforce jobs (Sept 09 - Dec09) were education, health and public admin (39,000) and finance and business services (1,000). The chart below shows that recent years have seen private sector employment increase at a significantly faster rate than public sector employment. This trend reversed over 2008-09, as public sector employment remained constant or increased (in specific sectors) and private sector employment experienced a sharp fall.

Private sector employment levels (RHS) and public sector employment by area of work (LHS) Q1 1999 - Q4 2009

• There has been much recent media discussion about changes in employment levels during the last decade. While there has been a recent fall in employment, significant numbers of jobs have been created since 1997. Between Q2 97 - Q4 09 the number of people in work increased by 2,391,000. In contrast, from Q2 79 to Q1 97 the total number of jobs in the economy only increased by 1,223,000.
• While the number of people out of work remains high, the picture is far better than we would have seen had the recession followed the trends of the 80s and the 90s downturns. The number of people claiming Unemployment Benefit (UB) in the 1980s continued to rise for more than five years after the recession ended in April 1981 - peaking at over three million in June 1986. And during the 1990s, the number of people claiming rose for over a year after the recession ended in October 1991, peaking at 2.96 million in November 1992.
• Across the economy average weekly earnings (total pay) rose sharply between January and February 2010 (three month average), showing a 2.3 per cent increase on the year compared to an annual rise of 0.8 percentage points on the year to January. This sharp rise has been driven by the financial services sector, where on the annual increase (single month) was 12.7 percentage points, compared to an annual fall of 3.4 points in January 2010, however manufacturing also showed strong growth (4.4 percent on the year). Public sector pay has remained fairly constant. These trends can be seen below:

Annual percentage change in total pay (including bonuses) (three month average) March 2001 - Feb 2010

• In their most recent analysis IDS have noted that the proportion of pay freezes in the private sector may be falling, under the influence of higher inflation and a recovery in output in key sectors. Their pay report also notes that in the public sector, when long-term agreements are excluded, just over two fifths of awards are pay freezes. ^[1]
• Although unemployment is starting to show signs of recovery it remains very clear that demand for labour is weak, and that maintaining public investment in the economy will be vital to securing a sustainable labour market recovery. This will be a key challenge for the next Government.

^[1] IDS (2010) Pay Report April 2010

Report (800 words) issued 26 Apr 2010