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Dusting off the unemployment measurement file

11.12.08 | 1 Comment

In his usual pithy way, Neil provides a reminder that it’s important to look hard at the statistics we’re being fed.

In this instance, it’s the new figures for unemployment released today by the Office for National Statistics (ONS), and splashed all over the media, which are worthy of a good luck.   (I must admit that the good years of employment had made me lose sight of some of the thorny measurement issues Neil raises, and he stirred me into reviewing things – not quite to the extent of going under the stairs to dig out the archives on this stuff – but at least to have a look for myself on the ONS website.)

The BBC, then, carries as it’s headline  figure the unemployment total (end of September) of 1.82 million.  Responsibly enough, it also quotes the latest claimant count at 98,900, but this latter figure is likely to get less coverage in days to come as the media focuses in on the higher figure.

It’s important first to make the difference between the two figures clear.  The unemployment figure (1.82 million) is based on the International Labour Organisation definition, which the incoming Labour government said it would use when it came into power in 1997.  It is measured by the Labour Force Survey of (from memory 57,000)households, and even though it is based on a sample and there open to samplinig differences, it is generally reckoned to give a more accurate representation of unemployment because it measures the number of people who ‘want to work, are available to work, and are actively seeking employment’, whatever their benefit status (including those not claiming benefit).

As such, it is generally considered more accurate than the ‘claimant count’, which is simply the number of people seeking unemployment-related benefit, as well as being comparable internationally.  For a  summary of the differences between the two measures see here.

 The important point is that the Conservatives used the less accurate claimant count when they were in government.  Thus, when we talk about the ‘1 in 10′ jobless figure of the mid 1980s, we are referring to 3 million people on the claimant count alone. The ILO figure was much higher. 

Here is the full table showing the claimant count difference between unemployment (claimant count) at its height in the fist quarter of 1985, and the most recent figure.  It shows that early 1985 the claimant count figure was 3.3 million, represenring11% of the workforce. At the most recent count in that table, the claimant figure was 0.94 million or around 2.9% of the workforce.

 So whenever, in the next few days, the  popular press start to talk of a 2 million unemployment figure and suggest that it’s creeping towards the 3 million (‘1 in 10′ figure) mark of the mid 80’s, it’s important to remember that these two figures are NOT directly comparable, and that we are still a long way better off than we were. 

Of course, there’s also a pretty good argument, made most notably in th 1990s by researchers at Sheffield Hallam University (SHU), that even the ILO figure underestimates the ‘real’ unemployment figure, which might been have 3.5 times as high as the claimant figure if the ‘hidden’ unemployed (i.e. those not seen as actively seeking work under the ILO definition) was taken into account.  In the 1990s, this huge disparity between ‘official’ and ‘real’ reflected, in particular, the mass shift to incapacity and other benefits which were associated with the destruction of industry across vast swathes of the country, the legacy of which is still felt today.

SHU redid their research in 2007, although low unemployment meant it didn’t get as much coverage as it did back in the 1990s. The cited report states, inter alia, that:

“The modest fall in real unemployment since 1997 therefore to some extent understates the true scale of Labour’s achievement. Joblessness has fallen, and it has fallen most in some of the places where it was once highest. Above all, perhaps, there has been no return to unemployment on the scale of the Conservative years.”

This suggests that, to some extent at least, those places hardest hit by the Conservative slash and burn policies of the 1980s have been able to recover.   To what extent they have been able to build resilience to the recession now upon us is a more debatable, though this evidence of people’s capacity to enter work at a quicker rate than less affected areas gives some hope.

 Things ARE going to get worse, but it’s going to have to get a lot worse to get anywhere near the bleakenss of the 1980s, whatever dodgy statistics get presented along the way.

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