Unemployment still rising sharply – no green shoots in the labour market
Today the latest labour market statistics show that during the period April – June 2009 unemployment hit 2,435,000, a national rate of 7.8%. This is a quarterly increase of 220,000, which is the 4th highest on record (the top three places were filled at the height of the 1980s recession and by the 244,000 increase we saw at the start of this year). Employment has fallen 271,000 on the quarter, the redundancy rate is still high and levels of long-term unemployment are moving up – 543,000 people have now been out of work for over 12 months and 140,000 of them are aged 18-24. The speed at which jobs are being lost is not increasing, but there is little evidence to suggest that it is starting to significantly slow.
The divergence between the claimant count rate and the ILO rate remains a matter for discussion. There has always been a gap between the two rates but the last two sets of figures we’ve had suggest that rather than moving closer together the last few months have seen the the two measures move further apart. Why could this be? Most commentators now seem to accept that the most likely cause is unemployed people not claiming benefits – whether this is because they are not entitled to JSA or they can manage without the benefit and have chosen not to bother with the JSA regime.
The context for this possible trend is the increased conditionality in the system – all claims over six months are subject to an income test, and the more general entitlement (six months of contributory JSA) still requires people to have built up enough NI contributions to recieve the benefit. In addition all claimants are only allowed 13 weeks on JSA before they have to start looking for jobs outside of their ‘usual occupation’ and in a larger travel to work area, and the relative value of benefits is at a 30 year low. It is perhaps unsurprising that many people are not able to and/or not choosing to sign on.