Differences between the ILO Unemployment and Claimant Count

Transcription

1 Differences between the ILO Unemployment and Claimant Count Introduction The Department of Enterprise, Trade and Investment (DETI) and the Office for National Statistics (ONS) uses the Labour Force Survey (LFS) as the source for unemployment. The LFS is based on a random sample throughout Northern Ireland. This is conducted every three months using a survey sample of 3,250 households. The survey collects information about the personal circumstances and work of everyone living in these households. Around the middle of each month, DETI releases statistics on the number of people who are LFS unemployed in Northern Ireland (NI) for the latest available 3-month rolling period. Other statistics on the labour market are published at the same time, including data on those in jobs and those who neither have jobs nor seek work. Statistics are also published on the monthly count of those claiming unemployment related benefits, i.e. Jobseeker s Allowance. This information is based on administrative records of people claiming these benefits and they are effectively a complete count of all benefit recipients. Although there is a large degree of overlap between the two series, they measure unemployment using different criteria. The LFS is also a sample survey with an associated degree of statistical error. This note explains some of the reasons for the differences to inform the most appropriate use of each series. As the LFS is conducted to internationally agreed definitions, it is used as the official unemployment measure in NI and the United Kingdom (UK). Concepts The definition of unemployment is internationally agreed and recommended by the International Labour Organisation (ILO) an agency of the United Nations. Unemployed people are without a job, want a job, have actively sought work in the last 4 weeks and are available to start work in the next 2 weeks, or out of work, have found a job and are waiting to start it in the next 2 weeks. In general, anybody who carries out at least one hour s paid work in a week, or who is temporarily away from a job (e.g. on holiday) is in employment. Also counted as in employment are people on government-supported training schemes and people who do unpaid work for their family business. Those who are out of work but do not meet the criteria of unemployment are economically inactive. Chart A shows how everyone aged 16 and over fits into one of these categories and Table A shows some examples to illustrate how the classifications work.

2 Chart A: International Labour Organisation classifications All Aged 16 and over Economically Active Economically Inactive In employment Unemployed Wants a job Does not want a job Table A: Examples of International Labour Organisation Classifications Example Mr A reported to the interviewer that he worked 36 hours last week as a lorry driver Mrs B lost her job as a secretary three months ago. Every week she visits an employment agency to try to find a new job, which she would be able to start immediately Ms C looks after her one-year-old son. She neither holds a job, nor wants a job Mr D has no job from which he receives any pay or profit. However, he helps in his parents shop for around 20 hours per week Mrs E is currently receiving training at a local hairdresser. This is being partly paid for by the Government. She works 28 hours a week and goes to college for 1 day per week Ms F is out of work, but stopped looking for new jobs a year ago as he does not believe any jobs are available ILO Classification In employment (worked 1 hour during reference week) Unemployed (out of work, wants job, has actively sought work in the last 4 weeks and is available to start work within 2 weeks Economically inactive she does not want or have a job. In employment In employment Economically inactive Measuring Unemployment DETI publishes two different measures of people who want to work but do not have a job; LFS unemployment and the Claimant Count. The LFS The LFS provides estimates of both the unemployment level and the unemployment rate. It is the rate that is the best indicator, because it measures the proportion of the economically active population who are unemployed and so takes account of changes in the size of population over time, as well as changes in the level of unemployment.

3 The LFS provides unemployment data in the current format back to Unemployment is measured through questions asked in the survey and not by interviewing everybody in the country. Answers are then weighted to represent everyone. As with any sample survey there will be sampling variability. The easiest way to explain this is by example. In the September to November 2008 period, unemployment in Northern Ireland was estimated to be 34,000 (seasonally adjusted). These figures were published in January If we drew another sample for the same period we would get a different result. In theory, we could draw many samples, and each would give a different result. The spread of these results is the sampling variability. Once we know the sampling variability we can calculate a range of values around the sample estimate that represents the expected variation with a given level of assurance. This is called a confidence interval. For a 95% confidence interval we expect that in 95% of the samples the confidence interval will contain the true value of unemployment that would have been obtained by surveying the entire population. For example, in September to November 2008, we can be 95% confident that the true level of unemployment was within 8,000 of the estimate of 34,000 (i.e. within the range 26,000 to 42,000). Sampling variability also affects changes over time. Changes in unemployment levels between three month periods are not usually greater than the sampling variability. For example, unemployment in NI is estimated to have fallen by 1,000 between June to August 2008 and September to November 2008 (seasonally adjusted). The confidence interval associated with the change was 8,000. We can therefore be 95% confident that the true change lies in the range between a fall of 9,000 and a rise of 7,000. Changes over time should be examined using the unemployment rate as it places changes over time into a wider context. However, the unemployment rate is still subject to sampling variability. The best estimate of the change in the unemployment rate between June to August 2008 to September to November 2008 was a fall of 0.1 percentage points (seasonally adjusted). We can be 95% confident that the true change in the unemployment rate lies within the range of a fall of 1.1 percentage points and an increase of 0.9 percentage points. Unemployment as defined by the unemployment measure is not directly affected by changes to the benefits system. However, changes to benefits often affect people s labour market behaviour. For example, a change may force of Jobseeker s Allowance to increase their job search activity. This may in turn increase the number of unemployed people finding work. The Claimant Count The count of of unemployment related benefits, which is known as the claimant count, is based on the administrative records of people claiming these benefits. Since October 1996 this has been the number of people claiming Jobseeker s Allowance (JSA). The claimant count consists of all people claiming JSA at Job Benefit offices. They must declare that they are out of work, capable of, available for and actively seeking work during the week in which their claim is made. People who qualify for JSA through their National Insurance contributions are eligible for a personal allowance for a maximum of six months. This is contribution-based JSA. People who do not qualify for contribution-based JSA can claim a means-tested allowance. This is income-based JSA.

4 Some do not claim JSA but sign on to maintain pension eligibility. These people claim National Insurance credits. Those claiming JSA enter into a Jobseeker s agreement. This sets out the action they will take to find work and to improve their prospects of finding employment. The claimant count is a by-product of administrative records of people claiming benefits. Each claimant gives their National Insurance number, address, sex, date of birth and marital status to the Job Benefit office. Details are also collected on the start and end dates of each claim and on the reason for ceasing a claim. These details provide data on the number of for one particular day each month as well as the numbers joining and leaving the count each month. Analysis of the claimant count is available in detail, for example by age and duration of claim. The publication of claimant count figures is normally five weeks after the date to which they refer. This allows deletion of records of those who ceased claiming but whose details remain on the system. It also allows the addition of new who started claiming before the date but whose records were not on the system at that point. Claimant count rates at national level and for Government Office regions are calculated by expressing the number of who are resident in each area as a percentage of workforce jobs plus the claimant count. Workforce jobs are the sum of employee jobs, self-employment jobs, Her Majesty s Armed Forces and Government supported trainees. The claimant count and LFS unemployment There is a large degree of overlap between the claimant count and LFS unemployment. People who are not can appear among the unemployed if they are not entitled to unemployment related benefits. For example; people whose partner is working young people under 18 who are looking for work but do not take up the offer of a Youth Training place students looking for part-time work or vacation work; or people who have left their job voluntarily Similarly, of unemployment related benefits may not appear in the LFS measure of unemployment if they state that they are not seeking, or are not available to start work. Claimants in a paid job may also not appear; in certain circumstance people can claim such benefits while they have relatively low earnings from part-time work. These people would not be unemployed. Chart B illustrates the relationships between unemployment and the claimant count.

5 Chart B: Relationship between unemployment and unemployment related benefit LFS unemploy ment non LFS unemployed Employed Inactive The claimant count is directly affected by changes to the rules governing entitlement to unemployment related benefits. This means that comparisons over time are affected by changes to the benefit system. The present seasonally adjusted claimant count series, which goes back to 1971 is estimated on a basis consistent with the current coverage, i.e. it allows for the significant changes to benefit rules, etc. The non-seasonally adjusted series include all aged 16 and over while the seasonally adjusted series includes all aged 18 and over. This difference in coverage exists because restricting the seasonally adjusted series to those aged 18 and over was the only realistic way of maintaining the consistent back series back to 1971, following a rule change in 1988 which resulted in most year olds becoming ineligible to claim unemployment-related benefits. The claimant count is published more quickly than the Labour Force Survey. Using the two sources together provides a more comprehensive picture of the labour market. Chart C: LFS Unemployment and Unemployment related benefit Claimant Count 140, ,000 October 1986, 123, ,000 80,000 May 1984, 109,400 February 1993, 105,700 August 1990, 93,200 October 1995, 85,800 60,000 September 1978, 53,500 40,000 April 1972, 38,200 December 2008, 35,900 20,000 November 1973, 23,800 Claimant Count LFS unemployment September 2007, 23,300 0 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08