Commentary on the labour market statistics for Sept to Nov 2016

The labour market statistics for Sept to Nov 2016 show a fall in unemployment (now 4.8%), but does this figure accurately represent the number of unemployed people in the UK?

labour market statistics for sept to nov 2016 city

The latest labour market statistics show that the unemployment rate (4.8%) is now at a very low level compared to the long-term trend. However this figure reflects a narrow definition of unemployment. It is based on the percentage of people of working age who looked for work within the last four weeks and who would be able to start work within two weeks and there are continuing notable differences across the UK.

The rate has fallen very slightly since the last quarter and is slightly lower than the same period last year. The male unemployment rate is slightly higher than the female rate. The unemployment rate for younger groups is much higher than for the general population. For those aged 16-17 and those aged 18-24, the respective rates are 26% and 11.1%.

To some extent, the labour market statistics for Sept to Nov 2016 will reflect employers’ post-referendum decisions although employers may change their plans based on the Prime Minister’s speech yesterday. The estimated employment rate is 74.5%. The rate is unchanged compared to the previous quarter in 2016 but up slightly by about half a percentage point compared to the same period in 2015. The biggest improvement has been in the Yorkshire and Humber region; nevertheless, there is still a relatively large gap in the employment rate between the south and the rest of the UK. Relative to the long-term trends in employment, the overall rate has continued to increase in recent years, and it is now near its record level. The long-term gender gap of the past twenty years has continued: the male employment rate is about 10% higher than the female employment rate.

The percentage of the UK population of working age who are defined as economically inactive (for example, people studying full-time, disabled people or retirees) is around 21.7%.  This current rate is very a slight increase from the previous quarter although slightly lower when compared to last year’s numbers. The north of England, Wales, Scotland and, in particular, Northern Ireland have above-average rates of economic inactivity. There is a big gender gap in economic inactivity: the rate for women is about ten percentage points higher than men. Economic Inactivity has been declining for years, yet one might wonder how much further economic inactivity could continue to decline without structural changes in policies affecting education, childcare and disability.

Overall, the labour market appears to be in a healthy state. However, with the Prime Minister’s speech yesterday and the Trump Inauguration on Friday, the UK economy is entering a period of uncertainty.