When the country’s unemployment figures don’t quite add up

WHEN we see a figure for unemployment, we all know what it means, don’t we? It is the number of people out of work and claiming benefits, right? Wrong.

The unemployment figures released each month comprise two numbers. The first is those who are indeed out of work and claiming benefits. This figure can, in turn, be split in two, between those who are now on Universal Credit (UC) and those claiming Job Seekers Allowance.

The second number may surprise you. That is the total of people looking for work but not claiming benefit.

The total number of unemployed is “calculated using a standard international measure, which includes everyone looking for work, whether or not they are claiming benefit” (House of Commons briefing paper 8286, April 2018).

But the number not claiming benefit and looking for work is measured using surveys. In other words, it is far from precise.

What we have been told over the past three years is that the total number of unemployed in the country is falling.

In May 2015, the total number of unemployed was reported as 1.83 million. By April 2018, the reported number of unemployed had fallen to 1.42 million.

You might expect that the total number of unemployed has fallen, the proportion of the total who are signing on for benefit would remain pretty much the same.

The number of benefit claimants in May 2015 was 799,400 but by April 2018 it had risen to 897,000. So, while we have all been happy that employment has been falling, we have been unaware that the hard factual element of unemployment figures have been going up.

The falling unemployment figure is entirely due to people out of work and not claiming benefits – a figure that is worked out by surveys.

Today, the hard number of claimants represents 63 per cent of the total unemployed figure, compared with 43 per cent three years ago.

The claimant count does have some inconsistencies of its own.

Universal Credit is slowly replacing Jobseekers. More people are required to make themselves available for work to get the benefits than was the case under Jobseekers, so the number of people seeking work and claiming benefit will go up. It is a necessary impact of new rules covering benefits.

As the rules defining benefit are supposed to ensure that the genuinely unemployed must seek work to claim benefits, the best you can say is that the true level of unemployment had been underestimated for years.

The fact remains that the claimant count for the first four months of this year has risen by an average of 12 per cent, and in some areas, double that.