JSA claims fall faster than unemployment
Nigel Williams, 20 February 2014
Unemployment was down again in the last quarter of 2013. This may look a bit weird as the December estimate is actually higher than the November one, but down is the correct interpretation.
Survey Design
The Labour Force Survey, where the figures originate, is substantial, covering tens of thousands of households, such that it takes three months to get round to everyone in a representative sample. Each month, people join and leave the survey and the month-to-month balance changes. Only after three months, taken together, can a representative estimate emerge. Therefore there is no spin in taking a higher number and speaking of lower unemployment. The valid comparisons are with three months before, with some seasonal adjustment to allow for, say, student holidays, agricultural or Christmas jobs, or, most securely, with a year before. That means comparing the 2.34 million unemployed with 2.47 million three months earlier and 2.50 million in the last quarter of 2012.
What kind of employment?
There is more information lurking in the figures. Over that three-month period, the number of employees increased by 63,000. That is a 0.25% increase. The number of self-employed increased by 172,000. That is almost three quarters of the increase in employment and is a 4% increase in self-employment. Quarter 4 may be a peak time for self-employment, even after seasonal adjustment. Over a year, the increase is only 3.6% but that is still considerably more than the 1.1% increase in the number of employees.
Claimant Count
Over a year, from January to January, 21% has been wiped off the claimant count. That is a third of a million people aged 16 or more. It is double the year’s (quarter 4 to quarter 4) drop in the number of unemployed. Fewer than half the number of unemployed are now JSA claimants. It will take more detailed analysis of the Labour Force Survey, maintaining respondents’ confidentiality of course, to ascertain what sort of employment awaits people coming off JSA. Self-employment has in common with zero-hours contracts that it brings no guaranteed income. If it turns out that people are coming out of unemployment to set up successful entrepreneurial businesses then that is indeed good news. The alternative is that people are exchanging a life of benefits for a life without benefits, making a small saving for the Treasury but missing out on the value that productive labour adds to the economy.