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Economic & Labour Market Review Vol 3 No February 9 FEATURE Debra Leaker Trends since the 197s SUMMARY occurs when an individual is available and seeking work but is without work. There are various causes of unemployment, but it normally relates to the economic cycle. When the economy is strong, employers create more jobs and unemployment falls. Conversely when the economy is weak, there is a reduction in job opportunities and unemployment rises. This article examines unemployment trends using information from the Labour Force Survey and Jobcentre Plus administrative system. It shows trends in unemployment from the early 197s, and compares the number of people who classify themselves as unemployed with those who are claiming unemploymentrelated benefi ts. It also looks at the characteristics of unemployed people to describe variations among different subgroups of the population. The number of unemployed people in the UK is measured through the Labour Force Survey (LFS) following the internationally agreed definition recommended by the International Labour Organisation. Unemployed people are those: without a job, want a job, have actively sought work in the last four weeks and are available to start work in the next two weeks, or out of work, have found a job and are waiting to start it in the next two weeks trends The (ONS) publishes two different measures of people who want to work but do not have a job. They are LFS unemployment and the claimant count. The LFS provides estimates of both the unemployment level and the unemployment rate. The rate is the best indicator because it measures the proportion of the economically active population who are unemployed. This means that it takes account of changes in the size of the population over time, as well as changes in the level of unemployment and movements between economic activity and inactivity. The claimant count is a count of claimants of unemployment-related benefits, based on the administrative records of people claiming these benefits. Changes to the rules governing entitlement to unemployment-related benefits directly affect the claimant count. This means that changes to the benefit system affect comparisons over time. Using the two sources together provides a more comprehensive picture of the labour market. Unless otherwise stated, analysis in this article is based on those aged 1 and over. There will always be a certain level of unemployment, even within a healthy economy, as people enter or re-enter the labour force or move between jobs. This is known as frictional unemployment. LFS data, which are available back to 1971, show that unemployment follows a cyclical pattern. Figure 1 and Figure show that during the early 197s, unemployment was relatively low at around 1 million or around per cent of the economically active population. increased in the mid 197s, before levelling off at around 1.5 million (5 per cent) in the late 197s. Because of the recession in the early 19s, unemployment rose sharply, peaking at over 3 million (just under per cent) in 19. The late 19s saw an economic recovery, with unemployment falling to around million (7 per cent) before the recession of the early 199s drove it back up to 3 million (around 1 per cent). Since this peak in 1993, unemployment has decreased gradually to reach levels and rates similar to those last seen in the late 197s; this trend continued to. The unemployment level and rate for the three months to October, at 1. million and.7 per cent respectively, were the lowest on record since 197. In the three months to September, the unemployment level stood at 1. 37

Economic & Labour Market Review Vol 3 No February 9 Figure 1 Levels of unemployment: by sex, 1 January to March 1971 to July to September Millions, seasonally adjusted 3.5 3..5. 1.5 1..5 All persons Men Women. 1971 1975 1979 193 197 1991 1995 1999 3 Figure rate: by sex, 1 January to March 1971 to July to September 1 1 million (up by 1, from a year earlier) and the unemployment rate was 5. per cent (up by.5 percentage points from a year earlier). Broadly speaking, as the country experiences economic growth, the number of jobs grows and unemployment falls, though any mismatches between the skill needs of the new jobs and the skills of those available for work may slow this process. Conversely, as the economy slows and goes into recession, unemployment tends to rise. A breakdown of unemployment by duration is available on a seasonally adjusted basis back to 199. Long-term unemployment, when a person is unemployed for over months, rose to a peak of 1.3 million (. per cent of the unemployed total) in the early 199s. In the three months to August, the number of people unemployed for more than months was the lowest on record, at 73, (19. per cent of the unemployed total). In the three months to September, long-term unemployment stood at 35,. Trends in the number of people claiming All persons Men Women 1971 1975 1979 193 197 1991 1995 1999 3 unemployment-related benefits have followed a similar pattern to the LFS measure of unemployment, although there are periods of divergence and convergence. Figure 3 shows that the claimant count reached two peaks of around 3 million during the recessions of the mid-19s and 199s and has been falling over the last decade. In January, the claimant count was 795,, the lowest level since 1975. Since then, the level has increased to reach 91, in October. Jobseeker s Allowance (JSA) is one of the benefits received by unemployed people. JSA claimant count data are based on information provided monthly to the ONS from the JSA payment system run by Jobcentre Plus. Figure (overleaf) shows that, in October, most women receiving JSA were seeking work in sales and customer service, administrative and secretarial and elementary occupations. Men concentrated their search more in elementary, skilled trades, and process, plant and machine operative occupations. Characteristics of unemployed people rates vary among different subgroups of the population in terms of sex, age, location, ethnic origin, disability status, qualification levels, parental status and previous occupation. Sex rates for men and women have followed similar cyclical trends, but the recessions of the 19s and 199s had a greater impact on men (Figure 1 and Figure ). The 19s recession resulted in a sharp increase in the unemployment rate for men, which overtook the rate for women in the latter half of 19 and has stayed above it since. In the three months to September, the unemployment rate for men was.3 per cent, while the rate for women was 5. per cent. However, it is worth remembering the unemployment rate is expressed as a proportion of the economically active population and does Figure 3 1 and the claimant count, February 1971 to October Millions, seasonally adjusted 3.5 3..5. 1.5 1..5 Claimant count. 1971 1975 1979 193 197 1991 199, Jobcentre Plus administrative system 1 Men aged 1 to and women aged 1 to 59. data are only available to August. 3

Economic & Labour Market Review Vol 3 No February 9 Figure JSA claimants: by sought occupation and sex, October Thousands, not seasonally adjusted Managers and senior officials Professional occupations Associate professional and technical Administrative and secretarial Skilled trades occupations Personal service occupations Sales and customer service occupations Process, plant and machine operatives Elementary occupations Occupation unknown not include those who are economically inactive. Therefore, the unemployment rate should not be used to measure the proportion of a group who are not working as it excludes those who are economically inactive. Although the unemployment rate was higher for men than for women in the three months to September, a higher proportion of women aged over 1 than their male counterparts were economically inactive (3. per cent compared with 9. per cent). Age Information about unemployment rates by age is available on a seasonally adjusted basis back to 199. Figure 5 shows that unemployment rates for younger age groups have been consistently higher than those in older age groups. In the three months to September, the unemployment rate for those aged 1 to 17 was 5.7 per cent. This compares with rates of 13.7 per cent for those aged 1 to,. per cent for those aged 5 to 9, and 3. per cent for those aged 5 and over (including those above state pension age). Figure shows that people aged under 5 account for an increasing proportion of the unemployed total. In the three months to September, some 1.7 per cent of unemployed people were under 5 years old, compared with 3.9 per cent in the three months to September 199. The group aged 1 to 17 increased from 5. per cent of the unemployed total to 1. per cent over the same period. Location The Annual Population Survey is derived from the quarterly LFS, but also 5 1 15 5 3 includes extra respondents, specifically to provide more robust estimates for local areas. Figure 7 shows the differences in unemployment rates by Government Office Region in England, Wales, Scotland and Northern Ireland for the months to Figure 5 rate: 1 by age group, March to May 199 to July to September 3 5 15 1 1 5 5 9 5+ 199 199 199 199 1 Denominator equals all active people in the relevant age group. 1 17 Figure proportions: by age group, March to May 199 to July to September 5 Men Women Source: Jobcentre Plus administrative system 5 9 March. The spread of unemployment rates between these parts of the UK was just.9 percentage points between the lowest unemployment rate (3. per cent) in the South West, and the highest unemployment rate (.7 per cent) in London. The differences in unemployment rates in local areas within regions are greater than the differences between regions. In the months to March, the region with the greatest contrast between local authorities was London, with.1 percentage points between the areas with highest and lowest unemployment rates. The highest unemployment rate was in Tower Hamlets, at 11.7 per cent and the lowest rate was in Richmond-upon-Thames, at 3. per cent. The region with the narrowest spread of unemployment rates was the South West, with 3.3 percentage points between the lowest, Purbeck in Dorset at.5 per cent, and the highest, Plymouth at 5. per cent. Ethnicity As with employment, care must be taken when using ethnicity data for analysis. The different ethnic groups often have 3 1 1 5+ 1 17 199 199 199 199 39

Economic & Labour Market Review Vol 3 No February 9 Figure 7 rate: by English region and UK country, 1 April 7 to March 1 North East Lowest UA/LA Regional rate Highest UA/LA North West Yorkshire and The Humber East West Midlands Midlands Source: Model-based estimates, 1 These unemployment data for local authorities are derived using a statistical model which takes unemployment estimates from the Annual Population Survey and improves them by borrowing strength from the accurately known administrative data on numbers of Jobseeker s Allowance claimants. Northern Ireland local area data are not available. different demographics, such as differing proportions of people within each age group. In the three months to September, the lowest unemployment rates were for people of White ethnic origin (5. per cent). rates were highest for people of Mixed ethnic origin (1.9 per cent) and the Black or Black British group (1. per cent). East of England London South East South West Wales Scotland Northern Ireland Parental status The LFS household datasets have been designed specifically for analysis at the family unit and household levels, and for person-level analysis involving the characteristics of the family unit or household in which people live. Figure 9 shows the unemployment rate for people by parental status for 199 to. In the three months to June 199, the unemployment rate for lone parents was 15.7 per cent, decreasing to 9.1 per cent in the three months to June 5. Since then, the unemployment rate has risen to 11. per cent, the highest rate among the family groups. Married and cohabiting mothers have the lowest unemployment rate, at 3.1 per cent. In the three months to June, the unemployment rate for those without dependent children was 5. per cent, down 1. percentage points from ten years earlier. Figure rate: 1 by disability, April to June 199 to July to September Disability rates are higher among people below state pension age who are long-term disabled than they are for people who are not. Figure shows that, in the three months to September, the unemployment rate among long-term disabled people below state pension age was 9.5 per cent, down by 1.5 percentage points from ten years earlier. This compares with 5. per cent for those who are long-term disabled, down by. percentage point from ten years earlier. One-fifth of the unemployed population below state pension age had a long-term health problem or disability (.1 per cent). Qualifications People with no qualifications are more likely to be unemployed than those with, particularly if these qualifications are at higher levels of educational attainment. In the three months to September, the unemployment rate for people below state pension age with no qualifications was 13. per cent. This compares with rates of 5. per cent for those qualified to GCE A level or equivalent, and 3.7 per cent for graduates. Around one-sixth of the unemployed population below state pension age had no qualifications (17.3 per cent). 1 Long-term disabled 199 1999 1 3 5 7 1 Men aged 1 to and women aged 1 to 59. Not long-term disabled Figure 9 rate: 1 by parental status, 199 to Percentages, 3 not seasonally adjusted 1 1 1 199 1999 1 3 5 7 Lone parents with dependent children Married/cohabiting mothers with dependent children People without dependent children Married/cohabiting fathers with dependent children Household dataset April to June quarter. 3 Base for percentages excludes people with unknown employment status. Dependent children are those under 1 and those aged 1 to 1 who have never married and are in full-time education.

Economic & Labour Market Review Vol 3 No February 9 Figure 1 rate: 1 by previous occupation, 3 Managers and senior officials Professional occupations Associate professional and technical Administrative and secretarial Skilled trades occupations Personal service occupations Sales and customer service occupations Process, plant and machine operatives Elementary occupations 1 to be looking for part-time work than unemployed men (5. per cent and 1.9 per cent, respectively). The most common method of job search was studying or replying to advertisements in newspapers, journals or on the internet. This was used by 5.9 per cent of unemployed people, while.9 per cent visited Jobcentres as their main method, 1.3 per cent applied directly to employers, and 7.3 per cent mainly sought work through friends and relatives. CONTACT elmr@ons.gsi.gov.uk Standard Occupational Classification. 3 July to September quarter. Previous occupation The LFS asks unemployed respondents who have worked within the last eight years questions about their last job. This information is used to calculate unemployment rates by previous occupation, as shown in Figure 1. In the three months to September, unemployment rates were highest among those who previously worked in the elementary occupations, at 9.7 per cent. These include hospital porters, bar staff, traffic wardens and cleaners. This compares with Figure where the majority of people claiming JSA were looking for a job in an elementary occupation. rates were lowest among those who previously worked in professional and managerial occupations (1. and. per cent, respectively). Job searching The LFS also asks unemployed respondents about the type of work they have been looking for and their main method of job search. In the three months to September, most unemployed people were looking for work as an employee (. per cent), while. per cent were seeking self-employment,.7 per cent were seeking a place on a government employment or training programme and the remaining.3 per cent had no preference. Of those who were looking for work as an employee or had no preference over working as an employee or self-employed, most (71. per cent) were looking for full-time work or had no preference, while. per cent were looking specifically for part-time work. Unemployed women were more likely REFERENCES Labour Force Survey (LFS) historical quarterly supplement data at asp?vlnk=135 Local area labour market statistical indicators at asp?vlnk=11 UK unemployment levels and rates at asp?vlnk=9 by age, duration and sex at asp?vlnk=7 (Nomis) Further regional and local area labour data at www.nomisweb.co.uk/default.asp 1

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