Despite apparently positive unemployment figures, underlying worklessness is now much higher than it was in May and could jump quite dramatically in the New Year, according to an employment expert.
The latest Labour Market Statistics report from the Office for National Statistics indicated that the UK jobless rate now stands at 2.51 million or 7.8% of the working population, down 0.2% on the May-to-July period and a fall of 0.5% year-on-year.
Unemployment fell by 82,000 over the last three months, the biggest quarterly drop in 11 years. The number of 16-to-24 year olds without work also fell by 72,000 to 945,000 on the previous quarter.
But Andrew Sissons, a researcher at The Work Foundation’s Big Innovation Centre, said on his blog that the data “isn’t all it seems”.
As a result, if the ONS’ traditional seasonal adjustments, which take account of how the job market fluctuates throughout the year, were removed, “unemployment is much higher now than it was earlier in the year”.
Sissons said that he was in no way suggesting that the ONS was massaging the figures or that seasonal adjustments did anything else but “remove noise from statistics”.
But the issue was that “2012 had been an unusual year in seasonal terms, particularly due to the Olympics and the extra Bank Holiday in June,” he explained. “If, as we would expect, the Olympics caused a one-off improvement in the job market over the summer, the seasonal adjustment may have become distorted.”
This meant that, if any extra jobs that were created due to the Olympics didn’t end up being permanent, or if the labour market weakened in the run-up to Christmas, “we may see the headline employment numbers jump quite dramatically in the New Year”, Sissons said.
Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, was equally cautious, attributing the large drop in unemployment at least partly to the increase in the number of young people in full-time education.
“The overall picture shows that employment is increasing at a slower rate than in the early months of 2012, but there are no signs yet of it going into reverse, which is consistent with the data on hiring intentions of employers highlighted in the latest CIPD quarterly Labour Outlook Report,” he said.
