Geoff Sheridan – ERSA | Working for better work

LMB Extra | October 2022

Geoff Sheridan — Mon, 31 Oct 2022 15:20:06 +0000

Labour Market Statistics – Extra Update, October 2022

This briefing is an addendum to ERSA’s usual monthly Labour Market Briefing (LMB) which provides our members with the latest labour market data and policy and research updates. In particular, it provides a longer and fuller exploration of the latest labour market data and trends that is drawn from the Office of National Statistics’ (ONS) monthly update. We felt this was a good time to expand what we do on this front given the current turbulent state of Britain’s economy and jobs market. Such special statistical updates aim to go beyond the now standard employment-unemployment-economic inactivity numbers and will include an additional look at other important data which provide further and fuller context to the state of Britain’s labour market.

Employment, Unemployment, Economic Inactivity and Vacancies

Since the economy started opening up after the lockdowns of 2020 and 2021, we’ve become accustomed to a-now-famous statistical quartet made up for four things: employment, unemployment, economic inactivity, and vacancies. In August, we reported some concerning, but very slight, indications in these numbers that the labour market was shifting and starting to be dragged down by the very high cost of living/cost of doing business. On the back of the Bank of England raising interest rates in August, and predicting that the economy would enter a recession by the end of the year, it became clear by September that this shift was very real. This saw both the employment numbers slow whilst the rate of economic inactivity continued to rise. Below we present these four sets of data across a range of relevant timelines.

The actual number (rather than percentage) of full-time employees saw a drop during the latest three-month period. Part-time employees also saw a drop during the latest three-month period, despite steadily growing since 2021, yet the number of self-employed workers has gone up during the latest three-month period but remains much lower than prior to 2020.

Unemployment

The unemployment picture has been one of the oddities of the post-pandemic labour market as it has continued to be very low. However, as we now know very well, there is still a serious broader worklessness problem that is largely explained by the stubbornly high numbers of economically inactive citizens.

As with employment above, three sets of timelines are represented by three graphs.

The final graph above may indicate a small rise in unemployment compared to its low point in March-May. Although this must continue to be monitored, particularly with news of increases in the numbers of insolvencies and economic inactivity (below), the unemployment numbers are still historically low. The other relevant data on the unemployment front comes from unemployment by duration and the claimant count.

The first graph above represents some good news on the subject of long-term unemployment with this number now being back below where it was prior to the pandemic. We have seen a steady decline in the claimant count since 2021 although recently a very slight uptick is evident.

Economic Inactivity

As noted above, with the very high and persistent rate of economic inactivity we’ve seen since the middle of the pandemic, the alarming and pressing problem of ‘worklessness’ is now not well captured by official unemployment numbers. As we head out of a post-pandemic boom and towards an inflation-generated recession, this problematic feature of our current labour market appears to be a stubborn one.

Overlapping with this age group is the large number of people out of work due to long-term health conditions which saw a record quarterly rise and reached its highest level in at least thirty years (at 2.49 million).

The rise in those economically inactive due to long-term health conditions is particularly alarming and appears, with other shifts noted in other data, to be a particularly persistent problem. This means that as the economy enters a recession and this problem remains, employment support providers will still be needed to provide the kind of long-term support this group of people need to get back into work – a case we’ll be making going into 2023 to ministers.

Vacancies

The vacancies problem that emerged in 2021 has been as important to understanding the pandemic era labour market as the economic inactivity problem above, and of course they are very much causally related.

The total number of vacancies stands at around 1.266 million, a little down on the record high of 1.3 million it reached in the three month period of March to May. This levelling off since March-May aligns with the other indicators that also indicate this period of 2022 is a likely watershed point in the timeline. There was a 34,000 drop from June to August this year, the largest fall on the quarter since the same period in 2020 at the height of pandemic-induced turbulence. This picture is complicated somewhat when the vacancy numbers are observed by the industrial sector. Those sectors with the largest falls in vacancy numbers were the information and communication industry, which was down 11,000 vacancies and the professional, scientific and technical activities industry, which was down 8,000 vacancies on the quarter. Human health and social work had the largest increase in vacancies, up by 7,000 on the quarter.

The Institute for Employment studies (IES) produced a more detailed and illustrative mapping of this sector-by-sector picture.

There has been rising concern for adult social care for many years, but became particularly acute during the pandemic and have seen many leave a sector already marked by high staff turnover. We must think of these problems in view of the other data above. To raise the most pressing and conjoined set of problems of the post-2020 labour market, this points to the relationship between the historically high rate of job vacancies and historically high economic inactivity rate . As with the NHS, adult social care impacts the broader economic inactivity problem beyond the perhaps narrow confines of this one sector. A survey run by the Association of Directors of Adult Social Services (ADASS) says that social care waiting lists have grown by 37% in less than six months. As of April, there were 542,000 people waiting for care assessments, direct payments or reviews. This is up from 396,000 in November 2021. The economics of this is simple and points to a very concerning on-going problem. This problem not only conjoins each of the employment, vacancy and economic inactivity problems we face, but one that joins both the rising health-related problems and the rising numbers of those choosing to stay out of work to look after family: if there are hundreds of thousands of people waiting for care, care payments or care reviews, the caring responsibilities will fall to family members who will not be freed up to take up work. This is a complex and multi-layered problem and one that needs expert and targeted support. Public policy needs to reflect this reality and the solutions that are available.To raise one promising example of support that should be fostered by government, we know of social enterprise and local government sector providers that target young care leavers so that they can be supported into work in the adult care sector. This, beyond simultaneously addressing pressing vacancy and economic inactivity problems, has the added benefit of offering opportunities for training and work for a very vulnerable segment of the unemployed people in between the ages 16 and 24, and in particular the highly vulnerable 16-17 year olds. Such work can be expanded and prioritised by national policy-makers as well as coordinated by local policy-makers found in local and combined authorities.

Regional level

The ONS reported the following data for the different regions and nations of the UK. For the three months ending in August 2022, the highest employment rate estimate in the UK was in the East of England (79.1%) and the lowest was in Northern Ireland (69.9%). The largest increase in the employment rate compared with the same period last year was in Yorkshire and the Humber (1.7%) while Wales saw the largest decrease of 1.9%. Up to August 2022, the highest unemployment rate estimate was found in the West Midlands (4.7%) and the lowest was in the South West (2.7%). There were record lows reported for London (4.0%) and the North East (4.4%), while the North West (3.5%) posted a joint record low.

For the three months ending August 2022, the highest economic inactivity rate in the UK was in Northern Ireland (27.8%) and the lowest was in the East of England (18.5%); the same region that boasted the highest employment rate above. Wales saw the largest increase in the inactivity rate compared with the same period last year, up 2.6 percentage points, with Yorkshire and The Humber seeing the largest decrease of 1.1 percentage points.

The sharp drop in the employment rate in Wales and its sharp rise in economic inactivity should alarm policy-makers in Cardiff and London.

Insolvencies and Redundancies

In September, it was reported in the Guardian that Insolvencies had jumped by 43% in England and Wales. By this month, the Guardian reported a further rise which constituted a 13-year high. At some point, this will filter down into unemployment and/or economic inactivity numbers.

Redundancies

The word redundancies sends a chill down the spine of any labour market analyst not to mention, of course, the prospect therein for any employed person. As the economy creeps then lurches toward a recession, we must start to look at the redundancy level as well as those other measures above.

The March to May quarter has started to emerge as a key data point in the time series, meaning it is at this point when things started to shift south in the labour market. The same is once again true with the rate of redundancies. The below tables drawn from ONS data, and the latter 2022 focused graph in particular, point to a slight but clear shift upward.

These are of course raw numbers and not percentages, but the upward trend line is notable and should be observed as we approach 2023. To draw a broader contextual picture, we must look at this alongside insolvencies data.

Insolvencies

Insolvencies data is being introduced here as it doesn’t feature in the updates provided by others like the IES and Learning & Work Institute and, as the economy heads towards a recession, it becomes a useful contextual device to try and understand problems such as unemployment rises, economic inactivity, claimant count numbers, and of course redundancies above. As noted above, reports of rising redundancies have appeared in the mainstream media. The ONS reports the following data:

Total company insolvencies in England and Wales in the second quarter of 2022 reached their highest quarterly level since July to September 2009, driven by Creditors’ Voluntary Liquidations (CVLs).
More than 1 in 10 UK businesses reported a moderate-to-severe risk of insolvency in August 2022.
During the same period, 22% of businesses said energy prices were their main concern, which is an increase from 15% in late February 2022; in firms with 10 to 49 employees, the figure was 30%.
In England and Wales, construction, manufacturing, accommodation and food service activities, and wholesale and retail trade industries together accounted for more than half of total business insolvencies in the first half of 2022.

This longer run time-series clearly marks out the effects of the financial crisis in 2009, the effects of the government support provisions like the furlough scheme that shielded companies from insolvencies in 2020, and the sharp rise we are now seeing in 2022.

We look to provide more assessment of these labour market trends as data is released and we learn more about our changing state of work and jobseeking in the UK. Such assessments will complement the core of ERSA’s work championing the role of the employment support sector and those public policy programmes that support this work.

Thought Leadership: Way to Work – why ‘half a million get jobs in under six months’ is either woefully poor, meaningless or plain wrong… a story in six charts!

Geoff Sheridan — Mon, 04 Jul 2022 13:56:49 +0000

Original twitter thread by Tony Wilson, Director, IES here in response to government’s press release ‘Half a million benefit claimants get jobs in under 6 months’. See also Elizabeth Taylor’s response in January Way to Work: “Any job now” is no solution to UK labour crisis.

‘Way to Work’ – why ‘half a million get jobs in under six months’ is either woefully poor, meaningless or plain wrong… a story in six charts!

Lessons include: flows are huge, especially now; and we need more transparent data/ better targets

First, this shows why 500k finding work every six months really isn’t special. Here’s *known* exits to work from Jobseeker’s Allowance (which Universal Credit replaced), over rolling six month periods 1998-2015. Barely ever below 500k, and always a lot higher after recessions.
Importantly though, above graph under-estimates flows into work, as loads of people weren’t followed up and so were ‘failed to sign’ or ‘not known’ (left below). Including these would give implausibly large figures (right below), so the truth will be somewhere in between. Luckily…
DWP did research in 2011 to understand these discrepancies gov.uk/government/pub and estimated that 68% of off-flows went into work. And if you apply that percentage to total off-flows, you get this – i.e. never below 500k, and often substantially above.
The above charts all stop at 2015 because: 1. UC had started to roll out and 2. JSA volumes were falling fast And the numbers overall really matter, as 500k is a volume target. 500k when there’s lots on UC/ JSA is far less ambitious than 500k when there aren’t. To illustrate…
This shows the *proportion* of JSA claimants known to have moved into work every month. Typically 8-10% and often higher (and this will be an under-estimate). ‘Way to Work’, by comparison, assumed just 5% of ‘Searching for Work’ group would find work each month (i.e. 83k of 1.6m)
So lots of graphs but what are the lessons? 1. Flows are probably higher than people realise, and especially high now 2. 500k wasn’t really explained at the time, and very unambitious as a ‘flows’ target 3. We need better data on flows, incl the data behind the press release 4. And we need to be honest that the *additional* impact of employment support is far smaller than big headlines like this. So we need to communicate better, evaluate programmes properly, celebrate those small differences and try to improve them. Final point is that…
t’s well possible that DWP’s 500k estimate is wrong! H/T @Stephen_EvansUK, who shows that off-flows from ‘Searching for Work were well over 2 MILLION – so either 500k to work is implausibly low, or off-flows to other destinations are implausibly high.

UKSPF: Template for ERSA members to send to lead local authorities

Geoff Sheridan — Mon, 13 Jun 2022 12:02:12 +0000

As stated in the UKSPF Prospectus, lead local authorities should now be engaging with local stakeholders in preparation for the investment plan submission window, which opens on 30 June 2022.

Some lead local authorities have been incredibly proactive since the launch of the prospectus when liaising with local stakeholders, however, some have unfortunately not been as effective. As ERSA has recommended many times before, our members should contact their local lead authorities and offer to help with their investment plans.

The next couple of weeks will be the last time to influence submission plans and get access to the replacement of European funding, this is particularly important if your ESF-funded projects end before 2024 and you are entitled to the voluntary sector considerations.

ERSA has collected some of the documents that have been sent out by lead local authorities for local stakeholders to fill out. We have subsequently made our own template for organisations to fill out and send to their contacts at their lead authorities as a final push before the submission window opens.

Download or view the template here UKSPF Project Ideas Template

If you have any further enquiries, please contact policy@ersa.org.uk.

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