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Labour Market Report

Introduction

This is the latest edition of the TUC's brief report on the state of the labour market, using the latest data from the Office for National Statistics. The employment recovery has strengthened, with a large increase in the number of people in employment. But there are still signs of fragility, with a high ratio of unemployed people to vacancies and heavy reliance on part-time, temporary and self-employment.

Unemployment

• In March - May 2010 ILO unemployment was 2,468,000. This was 4,000 down from last month's figure, which covered February to April and 34,000 lower than the December - February figure. This is the largest quarter-on-quarter fall since the start of the recession.
• Claimant count unemployment also fell, with 1,460,100 people currently in receipt of JSA. The level fell 20,800 between May and June, and has fallen in eight of the last ten months.

Long-term unemployment is typically the last statistic to show the end of a recession and it is still rising. This means that short-term unemployment (less than 6 months) has now been falling for a year. But the number unemployed over 6 months has climbed throughout the recession, rising 5,000 this month to 1,306,000. It is a similar story for even longer term unemployment - 787,000 people have been unemployed over 12 months, and increase of 15,000 on the month and 61,000 on the quarter; 293,000 have been unemployed over 24 months, up 9,000 on the month, 25,000 on the quarter.

Inactivity

Working age economic inactivity fell significantly. There were 8,097,000 working age people not in employment or unemployment - this was 89,000 lower than last month's figure and 62,000 down on the previous quarter.

2,282,000economically inactive people said they wanted work. This figure was down 42,000 from last month and 56,000 lower than in the last quarter. Sometimes a reduction in this figure can simply reflect people giving up on ever being able to work again, but the 66,000 'discouraged workers' was down 7,000 on the month and was unchanged on the quarter.

Employment

There were 28,984,000 people in employment in March to May. This is 119,000 higher than last month's figure and 160,000 higher than the figure for the last quarter. The month-on-month change is biggest increase since records began in 1971, the quarter-on-quarter increase the biggest since 2006.

Part-time employment

• Nearly half the month-on-month increase in employment was due to a substantial increase in part-time employment, which was up 55,000. The part-time increase on the quarter - 148,000 - was even bigger. These are large increases, since records began in 1992, there have only been four times when the month-on-month increase in part-time employment has been higher and the quarter-on-quarter increase is the highest ever.
• At the same time, the level and rate of involuntary part-time employment - people who say they are only working part-time jobs because they couldn't find a full-time alternative - has been rising steadily during the recession. The number of people affected is now significantly higher than in the 90s recession and the level is roughly similar:
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Temporary employment

• Temporary employment has also made a significant contribution to the employment increase. There are currently 1,539,000 temporary employees, the highest level since 2003. The increase - 54,000 on the month, 78,000 on the quarter - is the biggest monthly increase and the second largest quarterly increase ever.
• Involuntary temporary employment is also very high. 552,000 temporary workers say they would prefer a permanent job; this is the highest level since October 1999. 35.9 per cent of temporary workers are involuntary, the highest proportion since April 1999.

Workforce jobs

This month's labour market statistics included the new quarterly Workforce Jobs figures, which are now broken down in more detail than previously. These data also show that between December 2009 and March 2010 there was only a 13,000 increase in the number of jobs (compared to an annual fall of 495,000).

In particular, industries that have in the past been drivers of job creation are still doing badly. In construction the number of jobs fell by 63,000, in retail there was a 36,000 drop and education saw an 11,000 fall. As with previous recessions, manufacturing jobs are also still being lost, with a quarterly fall of 51,000.

There are areas where the number of jobs is rising. In administrative and support activities there was a 90,000 rise, and real estate (17,000) and electricity and gas (13,000) saw small increases. Professional scientific and technical sectors are also showing improvement, with a 52,000 quarterly includes in jobs. However, it remains to be seen whether these increases will be sustained - and whether they will soon start to be replicated in other sectors.

Pay

Average weekly earnings rose 2.7 per cent in the year to May (whole economy, total pay). This averages out the increase for the private sector (2.8 per cent) and the public sector (1.5 per cent if we exclude financial services).

The data on pay settlements from IDSPay.co.uk shows that, in the three months to May, the median increase was 2 per cent. This is lower than the AWE figure, possibly reflecting the fact that workers are less likely to be working reduced hours, especially in the private sector.

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Report (900 words) issued 21 Jul 2010