Wednesday, August 26, 2009
The problems in measuring unemployment in the UK
The UK Government is somewhat confused by the latest unemployment data. The problem is caused by the two different measures of unemployment that they publish. The first is based on the number of people claiming job seekers allowance (JSA). This indicates that unemployment is rising but at a relatively modest rate of around 120000 in the latest three months. In contrast the alternative measure is based on a survey conducted by the International Labour Organisation's (ILO) count. This focuses on those people looking for work. The ILO's latest data shows an increase of some 400000 people unemployed over the same period. The Government has announced an urgent enquiry to try to find out the reasons for the large difference. One very likely explanation is that a number of those people currently becoming unemployed were second earners and they are not bothering to sign on for unemployment benefits. They are living off their partner's income. In addition it seems likely that many migrant workers are registering as unemployed on the ILO survey but they are not entitled to receive JSA. Hopefully in a few months we will get to the full truth behind the UK unemployment data!
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3 comments:
In more recent articles, the rising unemployment seems to be slowing down, as the number of people out of work rose by 88,000 which is the lowest quarterly rise for 13 months. This has led to hope that the economy is recovering slightly.
Also, the number of people claiming job seeker’s allowance also had the smallest rise since May last year (a rise of 20,800).
The article further claims that the recent gap between overall unemployment using the ILO definition and the claimant count (those seeking job seeker’s allowance) has mainly disappeared when comparing the figures over the same period.
Moreover, another problem with the international labour organisation’s (ILO) survey data is that it is open to sampling error.
FT article: http://www.ft.com/cms/s/0/39b4f9e0-b8a3-11de-809b-00144feab49a.html
National statistics: http://www.statistics.gov.uk/cci/nugget.asp?ID=12
Perhaps some people cannot claim, for example workers from the city who have made thousands of pounds, have got enough. The people who claim job seekers allowance can only claim if they only have a certain amount of money. If a person who has £25,000 savings and asks for JSA, they will be rejected because they have enough saved and are expected to spend the money they saved first. So that is why some people have not claimed. Also some people may have not claimed because although there is nothing wrong with claiming JSA, some people fear that they will be on it for years. But who knows, and there have been other good reasons in the blog posted by Kevin. So I think everyone is speculating, and there are reasons by everyone. Anyhow we will find out.
The unemployment is slowing down - which is a good sign - that the UK economy is recovering.
However, the rise in temporary employment has increased, which is also another good sign - as temporary unemployment leads to permenent.
It will tkae a long time for the employment rate to be what it used to be, before hte recession - but a slow gradual recover is good.
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