More unemployed, but fewer on the dole: what the politicians missed in the jobless figures

18 April 2013

"Seventy thousand more people are now on the dole than last month, youth unemployment rose by 20,000 and long term unemployment rose yet again." Liam Byrne, Labour's Shadow Work and Pensions Secretary, 17 April 2013

Yesterday's unemployment figures from the Office for National Statistics (ONS) seem to have generated some confusion among politicians.

Commenting on the new figures, Labour's Shadow Work and Pensions Secretary Liam Byrne claimed that 70,000 more people were "on the dole" last month.

While the ONS release confirms that unemployment has risen by 70,000, this doesn't actually mean that this many more people are on the dole, which is usually the term applied to those claiming unemployment benefits (The Oxford English Dictionary defines it as "benefit paid by the state to the unemployed").

When we contacted the Labour Party we were told that their use of the phrase "on the dole" was a "colloquial way of referring to unemployment." Labour are not alone in using the two interchangeably. For one, this morning's Sun headline read 'Dole queue up as wages go down'.

In fact, we know from yesterday's ONS labour market statistics release that the number of Jobseeker's Allowance claimants has decreased by 7,000 from 1,538,000 in February 2013 to 1,531,000 in March 2013. 

On the other side of the political spectrum, employment Minister Mark Hoban was reported in the Express as saying that the fact that new JSA claims last month were the lowest for four years "would indicate that unemployment is not on an up."

Mark Hoban seems to be suggesting that a reduction in new claims for Jobseekers Allowance is indicative of a more benevolent labour market. The chart below shows that while new claims for JSA - the inflow - have certainly been falling since May 2010, so has the number of people coming off JSA - the outflow (albeit at a slightly slower rate).

Therefore, it doesn't necessarily follow that fewer JSA claims mean a more favourable job market.

In fact, being classed as unemployed is actually quite different to claiming JSA. The Government classes you as unemployed if you are without a job, want a job, have actively sought work in the last four weeks (or are waiting to start one). As the ONS commentary makes clear, not everybody who is unemployed claims Jobseeker's Allowance (JSA) or is even eligible for it.

Looking at the movement in the two indicators over time you can see that the two are clearly correlated, although divergences (where one rises while the other falls) are not uncommon.

So how can we explain these divergences? 

There are a number of potential factors - expertly summarised by ONS statisticians here and here - but in short, not all unemployed people are eligible for JSA, some are eligible but don't claim it, and some people who are eligible for JSA may not fit the definition of unemployed (those working fewer than 16 hours per week can claim, for example).

There are specific things that can influence the interaction between these two metrics. Part of the divergence can be explained by migration, for example, as this ONS report points out:

"in general migrants are more restricted in their access to unemployment benefits than citizens of the UK. This means that although in their responses in the LFS classify them as unemployed, a proportion of migrants are either not eligible for or do not claim JSA, and therefore increase the gap between the two measures."

Similarly, students can be classed as unemployed if they are seeking work while studying, but aren't generally eligible for JSA. Nor are individuals whose partner earns enough to place their household income above the eligibility threshold.

In other cases, people who count as unemployed may not be eligible to claim JSA if they left their previous job voluntarily or as a result of misconduct, in which case they are disqualified from claiming for a period of 13 weeks.

So while it is sometimes nuanced, the difference between JSA claimants and unemployed people is marked, and though the two may overlap they shouldn't be used interchangeably.


Flickr image courtesy of Tax Credits

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