Unemployment rises, employment falls

UK Labour Market, July 2015: ONS

Main points for March to May 2015

  • There were 1.85 million unemployed people. This was 15,000 more than for the 3 months to February 2015, the first quarterly increase since January to March 2013. Comparing March to May 2015 with a year earlier, there were 273,000 fewer unemployed people.
  • The proportion of the economically active population who were unemployed (the unemployment rate) was 5.6%, little changed compared with the 3 months to February 2015 but lower than for a year earlier (6.5%). Economically active people are those in work plus those seeking and available to work.
  • There were 9.02 million people aged from 16 to 64 who were out of work and not seeking or available to work (known as economically inactive), 30,000 more than for the 3 months to February 2015 and 104,000 more than for a year earlier.
  • The proportion of people aged from 16 to 64 who were economically inactive (the inactivity rate) was 22.2%, little changed compared with the 3 months to February 2015 but higher than for a year earlier (22.0%)
  • There were 30.98 million people in work. This was 67,000 fewer than for the 3 months to February 2015, the first quarterly fall since February to April 2013. Comparing March to May 2015 with a year earlier, there were 265,000 more people in work (272,000 more people working full-time and 7,000 fewer people working part-time).
  • The proportion of people aged from 16 to 64 in work (the employment rate) was 73.3%, little changed compared with the 3 months to February 2015 but higher than for a year earlier (72.9%).
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International comparisons: the economy

Measuring National Well-being: ONS

  • In international comparisons of household income the UK has dropped  from 5th place in 2005 to 12th place in 2011. This is partly as a result of the devaluation of sterling seen in this period.
  • Since 2009 inflation has remained high compared to the US, France and Germany but has been relatively less volatile
  • Despite falling 12 places between 2005 and 2011 when looking at rankings based on unemployment, the UK labour market has been more resilient in than previous recessions
  • In terms of household spending and wealth, the UK has remained relatively strong compared with other OECD countries
  • Despite falling two places in the rankings since 2005, the UK still fares relatively better under Net National Income than Gross Domestic Product

Frances Grady of the TUC said:

“The combination of recession and austerity has taken its toll on household finances, with income levels in the UK falling behind many of its European neighbours. ‘Even before the recession, household spending in the UK was far more reliant on debt than in other advanced economies. In order to address this as a country we need to obsess less about housing bubbles and focus instead on securing decent pay rises and creating better paid jobs.”

Immigration and unemployment

A report from Migrationwatch highlighted “the ‘remarkable coincidence’ between the rise in youth unemployment in the UK and the huge surge in immigration from Eastern Europe over the last eight years”.

The Chair of Migrationwatch, Sir Andrew Green, says that “most objective people would consider it a very remarkable coincidence if there was no link at all between them” although he acknowledges that “correlation is not causation”. However, he goes on to argue that “It is implausible and counter-intuitive to suggest – as the previous Government and some economists have done – that A8 migration has had virtually no impact on UK youth unemployment in this period.”

However, National Institute of Economic and Social Research (NIESR) researchers have used National Insurance registrations by foreign nationals to “analyse the impact of immigration on the UK labour market”.

Their results indicate that increased immigration was not associated with increases in claims for Jobseekers Allowance. They say that “Our results… seem to confirm the lack of any impact of migration on unemployment in aggregate. We find no association between migrant inflows and claimant unemployment. In addition, we test for whether the impact of migration on claimant unemployment varies according to the state of the economic cycle. We find no evidence of a greater negative impact during periods of low growth or the recent recession.”

And then there is the report from the Migration Advisory Committee (UK Border Agency) which says:

  • …any link between immigration and employment of British-born people cannot be proved to be causal. Rather, it should be thought of as an association
  • …we find a negative association between working-age migrants and native employment: (i) in depressed economic times; (ii) for non-EU migrants; (iii) for the period 1995-2010.
  • A ballpark estimate is that an extra 100 non-EU working-age migrants are initially associated with 23 fewer native people employed.
  • The associated displacement of British born workers was, on our calculations, around 160,000 of the additional 2.1 million jobs held by migrants, or about 1 in 13.