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Labour Market Report

Number 6, August 2010

Introduction

This report briefly assesses the state of the labour market, as revealed by the latest data from the Office for National Statistics. While falling unemployment and rising employment levels are good news, there are also a number of concerning signs about the future direction of the labour market recovery, with the rate at which unemployment is falling starting to slow, and under-employment remaining high.

Unemployment and economic inactivity

• Between April and June ILO unemployment was 2,457,000. While this was a fall of 49,000 on the quarter, the level only fell 12,000 on the previous month's release (March - May). Unemployment by the ILO measure remains 841,000 higher than January 2008.
• The claimant measure of unemployment has also continued to fall, with 1,461,200 people currently in receipt of JSA. The claimant count has now been falling for six consecutive months. However the rate at which the level is falling has slowed: between Jan and Feb claimant levels fell by just over 40,000, while the monthly change between June and July was only 3,800.

Long-term unemployment has increased, with 796,000 people now having been out of work for 12 months or more - and of this group 313,000 (39 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 33,000 on the quarter (Jan-Mar 2010 to Apr-June 2010) but only 2,000 on the month (April-May 2010).

Economic inactivity fell by 49,000 on the quarter. The number of people in this position fell slightly on the month (17,000) and 53,000 on the quarter. There are 2,339,000 people who are economically inactive and want a job, 56 per cent of whom are women. However, male unemployment levels are higher than those for women (60 per cent of all unemployed people are men) but while male unemployment has been falling since February, female unemployment rates have been level and experienced a monthly rise. These trends can be seen in the following chart.

Numbers unemployed and who are economically inactive but want to work by gender (LHS) (000s) and unemployment rates by gender (RHS) Jan 2008 - May 2010

Young people aged 18-24 continue to face the highest risk of unemployment of all age groups, with an unemployment rate of 17.5 per cent and 724,000 young people out of work. Older workers (aged 50+) have a far lower unemployment rate of just 4.6 per cent (with 391,000 workers in this group unemployed). However, the proportion of older unemployed people facing long-term unemployment of over 12 months is high - 43.3 per cent of older unemployed people are in this position (169,000 people) compared to 25.5 per cent of young unemployed workers (184,000). These trends can be seen in the following chart.

Unemployment rates by age (LHS) and proportions of unemployed people by age who have been unemployed for 12 months or more (RHS) Jan 2008 - May 2010

Employment

• During the April - June quarter 29,023,000 people were in employment, a rise of 184,000 on the quarter but only 43,000 on the month (April - May). Over the year, the number of people in employment has risen by 104,000 - however this masks a fall of 162,000 full-time positions and an increase of 256,000 in part-time jobs. The number of temporary jobs has also seen a sharp rise - 147,000 on the year, 95,000 on the quarter and 37,000 on the month.
• Unsurprisingly, rates of involuntary temporary and part-time work also remain high. 35.9 per cent of temporary workers could not fine permanent jobs (an increase of 59,000 on the quarter, and 13,000 on the month) and 1,079,000 part-time workers could not find full-time positions (an increase of 13,000 on the quarter, and 12,000 on the month).

Pay

Average Weekly Earnings (total pay) continued to rise, by an average of 1.3 per cent (three month average on the year). Pay growth was stronger in manufacturing (2.9 per cent), distribution, hotels and restaurants (2.1 per cent) and the public sector (2.9 per cent). According to Incomes Data Services, (the IDS pay database for the 12 months to 16^th August) the whole economy median for pay settlements is 2 per cent, with the lower quartile being pay freezes and the upper quartile starting at 2.5 per cent. In the public sector settlements are lower - the median over the same period was 1 per cent.

Vacancies

Vacancies increased slightly on the quarter (9,000), but fell on the month (also by 9,000). Vacancies in public administration have been falling since January. While industries including retail and food service activities have seen some recovery in vacancy levels since the beginning of the year, both also experienced small monthly vacancy falls. The ratio between vacancies and unemployed people is 1:5 - double the ratio of January 2008. The scale of the drop in vacancies, and the varied impacts by industry, can be seen in the following chart:

Vacancy levels by industry (000s), Jan 2008 - July 2010

Report (900 words) issued 18 Aug 2010