Unemployment Falls but JSA Claims Rise

Posted on 15 November, 2012 by Kirsten Kennedy

Only a few months ago, unemployment was seen as one of the biggest issues in the UK. However, skip forward to the present day and the figures have fallen dramatically – indicating that Britain is well on its way to full recovery.

The end of the recession will have no doubt played a large role in such a positive step in the field of employment, as businesses will once more be able to hire additional workers without the fear of their company collapsing in the near term, thus giving hope to those who have still been unable to acquire a full time position.

Yet, confusingly, the number of people in this country claiming Jobseeker’s Allowance (JSA) has risen, even as the unemployment figures fall. The question, then, is why is this?

This week, the Office for National Statistics (ONS) released figures demonstrating that, yet again, unemployment has dropped in the past quarter, inclusive of the months from July to September.

During this period the jobless total dropped by 49,000, with total unemployment reaching its lowest figure in over a year, amounting to 2.51 million. Or, in other words, only 7.8 per cent of the UK’s potential workforce now finds themselves without a job.

Even better, the data shows that the number of full time jobs created in the period has managed to outstrip the total part time work on offer for the first time in a significant timescale. 51,000 workers managed to find full time employment, compared to 49,000 who were offered part time roles.

Youth unemployment also took a turn for the better, with the number of 16 – 24 year olds currently without work dropping by 49,000 to reach 963, 000. While this means that over 20 per cent of young people are still out of work, well ahead of the UK national average, it certainly indicates progression in the category and sets a trend for the coming months.

According to the ONS, almost all of the drop in unemployment can be attributed to the high numbers of 16-24 year olds finding work.

Unfortunately, it is not yet certain that the improvements in youth unemployment will be carried forward into the next quarter, as many experts claim that the huge jump in youth employment was largely due to temporary work during the Olympic and Paralympic Games. This could also account for the number of recipients of Jobseeker’s Allowance rising towards the end of the quarter – a time when those working at the Games would once more have had to resume their search for employment.

In October alone, the claimant count (or number of people applying for Jobseeker’s Allowance) rose by 10, 100 from September to reach 1.58 million. This could spell a gloomy future for those currently searching for a job, as the claimant count figures precede the figures pertaining to the job market and as such are a good early indicator of what will happen in the jobs market in coming months.

Economist at HIS Global Insight, Howard Archer, says; “Scratch beneath the surface and there are signs of some softening in the labour market’s recent impressive resilience.

“Of course, not too much should be read into one month’s data and they were likely affected by some of the people who were involved in the Olympic and Paralympic Games seeing their employment come to an end.”

However, BNP Paribas spokesman David Tinsey believes that the most recently released figures indicate a further period of unemployment concerns which will only be seen in the next quarterly report. He also predicts that things may well get worse before recovery truly kicks in.

He said; “It is probably a bit early to call a turn in the labour market, but some cooling in the recent rapid expansion in employment was likely given the much more sluggish reading on the economy from the GDP figures.

“Interestingly, the data today should still contain an ‘Olympics effect’ and, as such, as that drops out the data we may well see a rise in unemployment before stronger activity growth starts to reignite employment.”

Do you agree with Mr Tinsey, in that the unemployment statistics may well worsen before the upturn in the economy allows for recovery, or do you think the recent run of quarterly improvements in the figures is set to continue?




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