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Measuring Unemployment – Some Key Terms
Claimant Count (JSA) The number of people officially claiming unemployment-‐related benefits – must be actively seeking work
Labour Force Survey (LFS) All those actively seeking and available for work, whether or not they are claiming benefit
Long-‐Term unemployed People unemployed for at least one year
Labour force The number of people of working age who are able, available and willing to work
Full employment When there enough unfilled job vacancies for all the unemployed to take work
Discouraged workers People out of work for a long time who may give up on job search and effectively leave the labour market
Economically inactive Those who are of working age but are neither in work nor actively seeking paid work
Employment rate The percentage of the population of working age in full-‐time or part-‐time paid work
Unemployment rate Percentage of the economically active population who are unemployed
UK Unemployment Rate (Labour Force Survey)
0
2
4
6
8
10
12
14
Jan-‐Mar 1971
Apr-‐Jun 1972
Jul-‐Sep 1973
Oct-‐D
ec 19
74Jan-‐Mar 1976
Apr-‐Jun 1977
Jul-‐Sep 1978
Oct-‐D
ec 19
79Jan-‐Mar 1981
Apr-‐Jun 1982
Jul-‐Sep 1983
Oct-‐D
ec 19
84Jan-‐Mar 1986
Apr-‐Jun 1987
Jul-‐Sep 1988
Oct-‐D
ec 19
89Jan-‐Mar 1991
Apr-‐Jun 1992
Jul-‐Sep 1993
Oct-‐D
ec 19
94Jan-‐Mar 1996
Apr-‐Jun 1997
Jul-‐Sep 1998
Oct-‐D
ec 19
99Jan-‐Mar 2001
Apr-‐Jun 2002
Jul-‐Sep 2003
Oct-‐D
ec 20
04Jan-‐Mar 2006
Apr-‐Jun 2007
Jul-‐Sep 2008
Oct-‐D
ec 20
09Jan-‐Mar 2011
Apr-‐Jun 2012
Jul-‐Sep 2013
Oct-‐D
ec 20
14
Unemployment rate (per cent of the labour force)
Unemployment measures people without a job who have been actively seeking workwithin the last 4 weeks and are available to start work within the next 2 weeks.
Unfilled Job Vacancies in the UK Labour Market
The chart shows the number of registered unfilled job vacancies – this is often used as a guide to the strength of labour demand in the economy
620
638
652658
666
682 685
699 703712
723735
744734 733 731 735
600
620
640
660
680
700
720
740
760
Jan-‐Mar '14
Feb-‐Apr '14
Mar-‐May '14
Apr-‐Jun '14
May-‐Jul '14
Jun-‐Aug '14
Jul-‐Sep '14
Aug-‐Oct '14
Sep-‐Nov '14
Oct-‐Dec '14
Nov-‐Jan ´15
Dec-‐Feb ´15
Jan-‐Mar ´15
Feb-‐Apr ´15
Mar-‐May ´15
Apr-‐Jun ´15
May-‐Jul ´15
Job vacancies in thousands
Highest Unemployment Rates among EU Countries
25.6%22.5%
16%15.8%
13.2%12.4%
11.8%11.1%
10.3%9.9%9.8%9.7%9.6%9.4%9.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
GreeceSpain
CyprusCroatiaPortugal
ItalySlovakia
Euro areaFranceLatviaIreland
BulgariaEuropean Union
FinlandSlovenia
Unemployment rate as % of the labour forceSource: Eurostat, May 2015
Greece and Spain have the highest rates of adult unemployment in the EU. Youth unemployment greatly exceeds the average adult rate.
Regional Unemployment Rates in the UK (July 2015)
8.1%
6.7%
6.5%
6.5%
6%
6%
5.9%
5.6%
5.6%
4.7%
4.7%
4.5%
4.4%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
North East
London
Yorkshire and The Humber
Northern Ireland
North West
West Midlands
Wales
Scotland
United Kingdom
East Midlands
East of England
South East
South West
Unemployment rate
Youth Unemployment Rate in the UK
Youth unemployment rate (18-24 years old) Source: Office for National Statistics
10.6% 10.4% 10.4% 10.6% 10.4%11%
12.2% 12.2%13.3%
17.3%17.9%
19% 19.3% 18.8%
15%
13.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Unem
ployment rate in percent
Duration of LFS Unemployment in the UK economy
500
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Over 24 months
12-‐24 months
6-‐12 months
Less than 6 months
Total unemployment, seasonally adjusted In the last few years there has been a welcome fall in the level of unemployment
One of the big challenges for the UK is to make more progress in reducing long-‐term structural unemployment
Under-‐Employment
Under-‐employment occurs when people are counted as1. Looking for an additional job or actively searching for a new job with
longer hours to replace their current (main) job2. They want to work longer hours in their current jobUnder-‐employment can be rising even though unemployment is declining
1,5001,7001,9002,1002,3002,5002,7002,9003,1003,300
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source ONS, July 2015
Estimated under-‐employment level in the UK economy000s
The Rise of Part-‐Time Employment in the UK
A key feature of the UK economy in recent years has been a rise in part-‐time employment. By 2015 over a quarter of people worked part-‐time.
23
24
25
26
27
28
29
0
2
4
6
8
10
12
14
16
18
20
1992 Q2 1995 Q2 1998 Q2 2001 Q2 2004 Q2 2007 Q2 2010 Q2 2013 Q2
% part-time that could not find full-time job (LHS)
Part-time as % of total employment (RHS)
% of part-‐time employment % of total employment
Source: Office for National Statistics
The Rise of Zero Hours Contracts in the UK Economy
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0
100
200
300
400
500
600
700
800
900
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Zero Hours Contracts do not guarantee a minimum number of working hours each week
In employment on a zero hours contract (thousands)
Percentage of people in employment on a zero hours contract
• People on “zero-‐hours contracts” are more likely to be young, part time, women, or in full-‐time education when compared with other people in employment.
• On average, someone on a “zero-‐hours contract” usually works 26 hours a week
Total (thousands)
% of people in work
Source: ONS
UK Economic Growth and Unemployment
Per cent
-‐2.5
-‐2
-‐1.5
-‐1
-‐0.5
0
0.5
1
1.5
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
2013 Q1
2013 Q3
2014 Q1
2014 Q3
2015 Q1
2015 Q3
UK GDP growth, quarter on quarter
0
1
2
3
4
5
6
7
8
9
2007 Q1
2007 Q3
2008 Q1
2008 Q3
2009 Q1
2009 Q3
2010 Q1
2010 Q3
2011 Q1
2011 Q3
2012 Q1
2012 Q3
2013 Q1
2013 Q3
2014 Q1
2014 Q3
2015 Q1
2015 Q3
Unemployment rate
Budget 2016 – Policies to Stimulate Jobs?
Main corporation tax rate -‐ currently 20% -‐ to fall to 17% by 2020
The threshold at which people pay 40% income tax will rise from £42,385 now to £45,000 in April 2017
Annual threshold for 100% tax relief on business rates for small firms to rise
New rail lines to get green light, including Cross Rail 2 in London and the HS3 link between Manchester and Leeds
Tolls on Severn River crossings between England and Wales to be halved by 2018
Getting UK Unemployment Down Below 5%
Requires sustained real economic
growth – reducing cyclical volatility
Requires more balanced growth e.g. between the
regions
Policies need to make work and
education investment pay
A flexible labour market helps
absorb external economic shocks
Re-‐skilling the workforce in a fast-‐changing labour
market
Effective policies focus on the
underlying causes
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Infla
tion rate
CPI inflation target = 2%
Inflation Rate in the UK Economy in Recent Years
A lower inflation rate means prices rise more slowly – this is known as disinflation
Source: Office for National Statistics
CPI Inflation in the UK over the last 20 Years
The inflation rate for goods such as clothing and computing equipment has been, on average, lower than for service such as insurance and education
-3
-2
-1
0
1
2
3
4
5
6
7
1995 JAN
1996 JAN
1997 JAN
1998 JAN
1999 JAN
2000 JAN
2001 JAN
2002 JAN
2003 JAN
2004 JAN
2005 JAN
2006 JAN
2007 JAN
2008 JAN
2009 JAN
2010 JAN
2011 JAN
2012 JAN
2013 JAN
2014 JAN
CPI all items
CPI goods
CPI services
Annual rate of change of consumer prices (%) Source: Office for National Statistics
CPI and Core Inflation in the UK In Recent Years
CPI All Items: Percentage change over 12 monthsCore CPI: Excludes energy, food, alcohol & tobacco
Annual rate of change of consumer prices (%) Source: Office for National Statistics
-‐1
0
1
2
3
4
5
6
Jan-‐05
Aug-‐05
Mar-‐06
Oct-‐06
May-‐07
Dec-‐07
Jul-‐0
8
Feb-‐09
Sep-‐09
Apr-‐10
Nov-‐10
Jun-‐11
Jan-‐12
Aug-‐12
Mar-‐13
Oct-‐13
May-‐14
Dec-‐14
Jul-‐1
5
CPI All items
Core CPI
Contributions to CPI Inflation in the UK
-‐1.5
-‐1.0
-‐0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2012 FEB
2012 APR
2012 JUN
2012 AUG
2012 OCT
2012 DEC
2013 FEB
2013 APR
2013 JUN
2013 AUG
2013 OCT
2013 DEC
2014 FEB
2014 APR
2014 JUN
2014 AUG
2014 OCT
2014 DEC
2015 FEB
2015 APR
2015 JUN
2015 AUG
Other
Education
Transport & Package Holidays
Electricity, Gas & Fuel
Housing
Food & Drink
Annual rate of change of consumer prices (%)
Falling Prices (Deflation)
Why is the rate of inflation in the UK so low?
Falling global commodity prices including oil
Slow wage growth in the labour market
Falling food prices
Continued price deflation in technology products
Slower economic growth – falling towards 2%
Still some spare capacity on the supply-‐side
Why is inflation difficult to forecast accurately?
Forecast inflation for UK (source: BoE)
The chart shows the UK CPI inflation forecast published by the Bank of England. The probability fan chart for inflation indicates the range of probabilities for inflation in the forecast period.
Volatile global energy prices
Changes in value of the
currency
Uncertain growth of aggregate demand
Volatile food prices
Governmentindirect taxes can change
