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Labour Market Report

Number 3, May 2010

In the three-month period from January to March 2010 the internationally recognised ILO measure of unemployment stood at 2,510,000.

• This is 8,000 higher than the figure released last month, which covered December to February,
• 53,000 higher than the October - December figures,
• and 279,000 higher than the figure for Jan - Mar 2009.

The increase in unemployment compared with 12 months previously has been falling since May 2009, when it was nearly three times as big as in the latest figures:

For the third month running, as ILO unemployment rose, the claimant count measure fell - to 1,516,900. Claimant count unemployment is now 100,000 lower than it was in January.

The pattern of unemployment is significant - short-term unemployment (under 6 months) has been falling for nearly a year, whilst longer-term unemployment has not stopped rising.

The latest estimate for the number of people in employment is 28,829, 000.

• This is 5,000 higher than last month' figure - the first month-on-month increase since January 2009, but
• 76,000 lower than Oct - Dec, and
• 341,000 lower than the figure for Jan - Mar 2009.

The change in employment from 12 months previously has been rising since last July:

In Jan - Mar 3,923,000 people were self-employed - an increase of 50,000 on the previous month's figures. Self-employment has trended upwards since the autumn of 2008.

There has also been an upward trend in part-time employment, from 7.5 million at the start of the recession (about 25.5 per cent of all jobs) to 7,713,000 in the most recent figures (26.8 per cent of jobs) - an increase from 7,671,000 in Dec - Feb. The proportion of part-time workers who say they are working part-time because they cannot get full-time jobs has risen from around a quarter to over a third - 34.2 per cent in Jan - Mar, though this was slightly down from 34.7 per cent the previous month.

The number of temporary workers has risen a little during the recession, from 7.35 million to 7,548,000 in Jan - Mar. The proportion of temporary workers who would prefer permanent jobs has risen more substantially, from just under 10 per cent to 14.1 per cent in Jan - Mar (up from 13.9 per cent in Dec - Feb).

Between January 2008 and March 2010, the number of economically inactive people grew by 3½ per cent, from 7,881,000 to 8,166,000.

• Of those who are currently economically inactive, 2,320,000 say they want jobs, up from 2,090,000 in January 2008, an 11 per cent increase.
• The proportion of economically inactive people who say they want work has risen from 26½ to 28½ per cent.

One might conclude that rising economic inactivity is just disguised unemployment, but it is not that simple. If we look at the most common categories of economically inactive people who want work, we can see that the increase has mainly been a growing number of students who say they want work:

Groups of economically inactive people who want work

Vacancies are still unhealthy. Before the recession, the number of job vacancies was quite steady, rarely dropping below 600,000 or going over 700,000. In Jan - Mar 2008 there were 697,000 vacancies; twelve months later, there were 466,000. There was a small recovery at the end of last year, with the level reaching 483,000 in Dec - Feb, but it fell in the last two months and now stands at 475,000.

In Jan - Mar the number of redundancies - 177,000 - was substantially higher than the Oct - Dec figure of 168,000. This is still below the levels we experienced 12 - 18 months ago, and the Jan - Mar 2009 figure was 123,000 higher: 299,000.

The most recent IDS Pay Report noted that the freezes were becoming less common in private sector pay settlements, though the average award was still lagging inflation. In the public sector, the proportion of freezes was rising and the average level of award was falling.

Average weekly earnings (whole economy, total pay) rose sharply, with the three month average for the year to March 4 per cent higher. This followed a 2.5 per cent increase in the year to Feb. Regular pay did not move much - the change in the year to March was 1.9 per cent, up from 1.7 in the year to Feb. Change was much more substantial in bonus pay - annual changes in bonus pay were negative throughout 2009, but there was a 1.0 per cent increase in the year to February and then a 14.1 per cent increase in the year to March.

To conclude, the first month-on-month rise in employment for over a year is welcome, and the declining number of short-term unemployed people is well-established. But unemployment has passed 2.5 million, vacancies are in the doldrums and rising long-term unemployment indicates that it will be some time before the jobs recession ends. Unemployment is still a major problem and support for unemployed people deserves continuing government investment.

Report (900 words) issued 17 May 2010