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Some signs of stability returning to UK labour market

12 August 2009

While UK labour market conditions remain bleak, figures released today by the Office for National Statistics suggest that the downturn may be losing some of its ferocity. Nigel Meager, Director of the Institute for Employment Studies said:

‘Despite the headline figure of increasing unemployment, several indicators now point to a period of relative calm. Flows on to Jobseekers Allowance have been steady since March, while flows off the register continue to rise month on month. This is a clear pointer to smaller claimant count increases in the months ahead. Vacancies, which now stand at 430,000, have likewise remained stable for the past three months after over a year of steep decline. The pattern is completed by the figures for redundancy, which also appear to have peaked.

‘With the pace of change apparently slowing in the labour market, it is a good time to take a more detailed look at what is going on. Economic inactivity - the numbers of people out of the labour market – has not increased as fast as in past recessions. But those in work are often working less than they would like: the number of people working part time because they could not find a full time job is rising towards a million. The huge spike in unemployment at the beginning of the year is working its way through the benefits system, with those on Jobseekers Allowance for 6-12 months now the fastest growing group of claimants. Contrary to early analyses, the impact of the recession is being felt less in the South East, and much more in the West Midlands and in the North East, where unemployment is highest and where it is rising fastest.

‘Looking ahead, however, any fall in unemployment is still some way off, and may be slow when it comes. Many employers are operating with spare capacity, and have retained staff in the downturn through short-time working and similar schemes; they will be able to absorb an initial upturn in demand without resort to recruitment. From a longer-term perspective, the main concern relates to young people entering the labour market, many of whom will be at the back of the queue for jobs when the economy picks up.’

Further information

For further information or comment, contact Nigel Meager or call +44(0)1273 763 445, or the IES press office, or on 01273 763414.