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Labour Market Report

Number 4, June 2010

Introduction

This report briefly assesses the state of the labour market, as revealed by the latest data from the Office for National Statistics. There are continued signs of recovery - but the indicators that the recovery is still weak are just as strong.

There are more than five unemployed people chasing each vacancy at Jobcentres and long-term unemployment is still rising. Employment has not fallen as precipitously as in previous recessions, but this is, in large measure, due to the growth of 'atypical' employment - self-employment, part-time and temporary jobs.

Unemployment

• Between Feb and April 2010 ILO unemployment was 2,472,000. While this was a rise of 23,000 on the quarter, the level fell 38,000 on the previous month's release (Jan - March 2010). This is the largest monthly fall since March- April 2008.
• The claimant measure of unemployment has continued to fall, with 1,481,100 people currently in receipt of JSA. The level fell 30,900 between April and May 2010, and has now been falling for four consecutive months. However, claimant levels remain close to double those of early 2008.

Long-term unemployment has seen another sharp rise, with 772,000 people now having been out of work for 12 months or more - and of this group 284,000 (37 per cent) have now spent over 24 months out of work. The number of people who have been out of work for 12 months rose by 85,000 on the quarter (Nov-Jan 2010 to Feb-April 2010), and 15,000 on the month (Feb-March 2010). Levels of long-term unemployment have doubled since early 2008. Of those facing long-term unemployment, 187,000 are young people - 26 per cent of unemployed 18-24 year olds have been out of work for over a year.

Economic inactivity increased by 29,000 on the quarter. This was driven by an increase in 58,000 in the number of people who are economically inactive because they are long-term sick (the first time since the start of the recession that there has been such a large rise). The number of people who are economically inactive but would prefer to be in work has also increased - 2,324,000 people who are inactive now want a job, up 4,000 on the month.

Employment

• During the Feb-April 2010 quarter 28,865,000 people were in employment, a rise of 5,000 on the quarter and 36,000 on the previous release (Jan-March 2010).
• Aggregate public sector employment has fallen for the first time since the end of 2007. While some parts of the public sector have only seen low employment growth during the downturn, health has continued to see significant increases, with employment in the NHS growing by 66,000 on the year. However, this trend has now come to a halt, with public sector employment falling or stagnating across areas including the health service (a small quarterly rise of 5,000), education (a quarterly fall of 3,000), and other health and social work positions (a quarterly fall of 4,000). The following chart shows trends in private sector and public sector employment levels since 1999:

Employment levels (000s) Q1 1999 - Q1 2010 in private sector (RHS), education, NHS and public administration (LHS)

Private sector employment has started to rise, increasing by 12,000 on the quarter. This is the second time over the last year that private sector employment has risen (between Q2-Q3 2009 levels rose by 17,000). While the increase is a positive sign, levels remain 972,000 lower than they were at the start of 2008. The scale of the rise is also far less than those routinely seen before the recession - from Q2 2007 - Q1 2008 private sector employment increased by over 100,000 each quarter.

'Atypical' employment

In Mar - May 2008 UK employment peaked at 29,564,000. In Feb - Apr 2010 it was 28,865,000 - a fall of 699,000. This fall was less than many people expected; part of the explanation was the rise in self-employment, part-time and temporary employment that has taken place during the recession.

Self-employment - in Feb - Apr 2010 there were 3,934,000 people who were self-employed - an increase of 12,000 on the previous month's figures. In Mar - May 2008, just before the recession, 3,841,000 people were self-employed.

Part-time employment - part-time employment reached 7,764,000 in Feb - Apr, up from 7,713,000 in Jan - Mar. This figure has been rising continuously since Mar - May 2008, when it stood at 7,489,000.

Temporary employment - in Feb - Apr 2010, there were 1,485,000 temporary employees, up from 1,467,000 in Jan - Mar. In Mar - May 2008 there were 1,424,000 temporary employees.

Thus:

• Self-employment has risen by 93,000 during the recession,
• Part-time employment by 275,000, and
• Temporary employment by 61,000.

We can't add up these figures as the categories overlap, but it seems very likely that, without the increase in 'atypical' work, employment would have fallen by a million or more over the last year, not 699,000.

What is more, a significant proportion of the people working in part-time and temporary jobs are only doing so because 'typical' work is not available, and this proportion has grown during the recession.

14.2 per cent of part-time workers and 35.9 per cent of temporary workers say they are in this position. In Mar - May 2008, these figures were 9.1 per cent and 25.1 per cent.

Report (900 words) issued 17 Jun 2010