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Mixed news from the ONS February release

17 February 2010

There is mixed news from the ONS February release; the broad measure unemployment fell very slightly in the three months to December, although the narrower claimant count measure of unemployment rose by 23,500 in January, following two recent monthly declines. The number of people in employment declined by 12,000, to 28.91 million during the past quarter, and there was also a rise of 72,000 in the number who are economically inactive.

On the other hand, the number of vacancies rose during this quarter by 49,000 to reach 479,000. The growth in vacancies began in the autumn and appears to be gathering pace.

These figures confirm just how fragile any recovery in the labour market is likely to be. Unemployment has not risen as much as we might have expected, given the depth of the recession. But this also implies that employment will rise very slowly as economic growth picks up. This remains the root cause of the apparently contradictory changes in several of these key labour market indicators.

Nigel Meager, Director of the Institute for Employment Studies, commented on the latest figures

‘It is encouraging that the overall level of unemployment has fallen slightly over the past quarter, although it is of some concern that the narrower claimant count measure increased by 23,500 in January.

‘However, there remain however good reasons to be cautious about the recovery and a concern that unemployment may begin to rise again. Recent reports suggest we can expect bad news, with large-scale redundancies later this year. So far the loss of jobs in the private sector during the recession has been partly offset by growth in public sector employment, which will go into reverse in the coming months.

‘The figures also raise concern about increasing detachment from the labour market. Durations of unemployment continue to increase. There is also a record number (over 8 million) economically inactive people of working-age, many of whom would like to work.

Nigel Meager continued:

‘The number of economically inactive people who would like to work grew again, this time by 75,000, to reach over 2.3 million. There was also an increase of 37,000 in the number of people unemployed for 12 months or more. With 27 per cent of the unemployed now out of work for more than a year, it is a huge test for the Government’s welfare-to-work policies to support these individuals back into employment after lengthening durations of worklessness. Among those people who have remained in work, flexibility in hours and working patterns have helped to keep overall employment levels up, but the downside of this is a significant growth in underemployment. In particular the number of part-timers who would prefer full-time work has grown again, by 37,000, and now tops the 1 million mark.

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.