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Unemployment shows small decline but inactivity reaches 8 million

20 January 2010

The ONS unemployment data released on 20 January 2010 show that the number of people unemployed in the UK has fallen for the first time in 18 months – but also shows the number of working age people out of the labour market has hit 8 million for the first time.

There was some good news in the latest Office for National Statistics figures as unemployment showed a surprise decline of 7,000 in the three months to November. The overall unemployment rate remained unchanged at 7.8 per cent. Youth unemployment improved most with 12,000 fewer 18-24 year olds unemployed. The Claimant Count also fell, declining by 15,200 between November and December. There was more good news as the number of vacancies in the economy, which showed a significant improvement in November, stayed broadly stable in December.

The data also show however that working-age inactivity has reached 8 million for the first time since comparable data have been collected, rising by 79,000. This growth was driven largely by increasing numbers of students, but was also contributed to by a growth of 34,000 taking early retirement. The number of the economically inactive who want to find work also increased, by 108,000 from the previous quarter.

Commenting today of the figures released by the Office for National Statistics. Nigel Meager, Director of the Institute for Employment Studies says;

‘Unemployment declined in November and there are now 30,000 more job vacancies than in September. Despite this ray of hope, it remains unlikely that unemployment will begin to decline quickly and there is clearly a lot of slack in the labour market at present. The number of working age people who are out of the labour market has breached the eight million mark for the first time ever. A growing number of these economically inactive individuals would like to work. In addition, significant numbers of people are underemployed, with more than one million part-time workers unable to find full-time positions.’

The ONS figures also show ongoing increases in longer-term unemployment, with 25.7 percent of the unemployed now out of work for 12 months or more. Nigel Meager says:

‘There are now 631,000 people who have been unemployed for 12 months or more, the largest number since November 1997. A big challenge for government is how to effectively support this group back into employment and to ensure they do not suffer the scarring effects which have resulted from previous recessions.’

Further information

Nigel Meager is a labour economist by training, and a well-established international expert on labour market and employment policy issues. Director of the Institute since 2004, he has a long and varied research track record covering the functioning of national, regional and local labour markets, unemployment, skill shortages, labour market flexibility, changing patterns of work and equal opportunity policies and practices.

For further information or comment, contact Nigel Meager or call , or the IES press office, or on 01273 763414.