Michael CartyThe headline measure of youth unemployment is “misleading.” This is according to Secretary of State for Work and Pensions Iain Duncan Smith, who has asked the Office for National Statistics (ONS) to change how it reports levels of youth unemployment. Latest unemployment data (published today: Wednesday 16 March 2011) suggest that the youth unemployment rate has never been higher. The CIPD has also this week issued a paper on how youth unemployment is measured, reported and understood. The CIPD’s Robert Blevin states that it would appear likely that its report has influenced Iain Duncan Smith’s take on this subject. Blevin says:
On this occasion, I think it was IDS echoing John Philpott, rather than the other way round. We shared John’s paper with them last week.
See the comments field below for Robert Blevin’s full comment.
ONS: Youth unemployment rate has ‘never’ been higher
Today’s unemployment data release (PDF format, 334.1K) from ONS reveals the following:
- The youth unemployment rate (for ages 18 to 24) was 18.3% over the three months between November 2010 and January 2011. The ONS says that the youth unemployment rate has “never” been higher.
- The youth unemployment level was 760,000 over the three months to January 2011. The ONS says that the last time this rate was higher was during the three months between May and June 1993, when it reached 762,000.
- The headline unemployment rate (on the ILO definition) rose to 8.0% between November 2010 and January 2011. This is up 0.1 percentage point when compared with the rate seen in the preceding three-months period (7.9%).
As noted above, the ONS says that youth unemployment is at its highest rate since comparable records began in 1992. But, as my colleague Sarah Welfare argued in an excellent blog post last month, this is not the complete story. A comparison of latest data on youth unemployment with pre-1992 estimates from ONS “suggests that so far, youth unemployment during the latest recession has not quite reached the heights seen in the 1980s.”
However, it is likely that press coverage of today’s youth unemployment data will once again emphasise the headline rate of youth unemployment.
Coverage of today’s unemployment data release includes the following:
- “Young people are continuing to bear the brunt of unemployment, with 974,000 16-to-24 year olds now out of work – the highest number since comparable records began in 1992, and an increase of 30,000 over the previous three months.” – The Guardian.
- “Another record high was reached in the unemployment rate for 16-24 year olds, up by 0.8% to 20.6%,” the BBC reports.
Iain Duncan Smith: ONS should not present ‘a misleading picture’ on youth unemployment
In his recent letter to the ONS (which the New Statesman has published to its website), Iain Duncan Smith argues that headline measure of youth unemployment (focusing on those aged below 25) is “misleading.” He says (the figures quoted here are from last month’s unemployment data release):
I am concerned [...] that the youth unemployment figures can too easily be used to present a misleading picture. [... T]he headline measure of unemployment is based on conventions set down by the International Labour Organisation (ILO) and counts as unemployed those who have recently looked for work and are ready to take up the offer of a job. [...] What this hides is that those in full-time education can legitimately be counted as unemployed if they are seeking work to fit around their studies. [...] In this context, it is misleading for the 965,000 figure to be used, when nearly 275,000 under-25s counted as ILO unemployed are also full-time students. This is more than one in four of the total and, with staying on rates in education having risen over time, accounts for a significantly larger proportion of overall youth unemployment than was the case twenty years ago.
Iain Duncan Smith concludes by asking that the ONS amend the way in which it reports youth unemployment data:
I am therefore asking that in future bulletins, you give more prominence to the number of unemployed people not in full-time study, to ensure that an accurate context is set for the debate on support for young people.
Writing about Iain Duncan Smith’s letter in the New Statesman, economist and former member of the Bank of England Monetary Policy Committee (MPC) David Blanchflower argues that it is motivated by a desire to distract attention from youth unemployment topping “the million milestone.” Blanchflower says:
Could it be that he is getting his retaliation in first before youth unemployment hits the million milestone? If you want a distraction quibble about the data. [...] It would be better to try and lower youth unemployment rather than fiddle with the statistics.
CIPD: Youth unemployment ‘is not worse than ever before’
Earlier this week, the CIPD published a Work Audit entitled Getting the Measure on Youth Unemployment (PDF format, 165.2K).
In this paper, CIPD chief economic advisor John Philpott focuses on how youth unemployment data are measured and reported, and how this influences public perceptions. He argues that “it is important to ensure that matters of definition and data restriction are fully appreciated and accounted for in the popular presentation of labour market statistics.” Failing to do so could “run the risk of distorting debate on policy solutions to labour market problems.”
Philpott has the following to say on how youth unemployment data are calculated:
The inclusion of full-time student jobseekers [in measures of youth unemployment] raises the measured level as well as the measured rate of youth unemployment. [...T]he inclusion of full-time student jobseekers in the unemployment measure does once again magnify youth unemployment as an indicator of social distress.
Philpott believes that a focus on the headline rate of youth unemployment as reported by ONS risks being “misleading:”
The conclusion that 1 in 8 young people are unemployed rather than the frequently cited but misleading figure of 1 in 5 provides no comfort to those without work. [...] The UK clearly has a serious youth unemployment problem but severe difficulty is being felt by only a relative minority of young people and the current situation is not worse than ever experienced before.
2011 Budget to focus on growth measures
It is widely expected that the 2011 Budget – which will be delivered by Chancellor George Osborne a week today (Wednesday 23 March 2011) – will focus on measures to promote economic growth. The Guardian reports that the Coalition Government is currently engaged in an initiative to move beyond the “prism of cuts,” instead seeking to put a more positive emphasis on how events are reported.
Update (Wednesday 13 April 2011): The latest unemployment data (PDF format, 378.8K) from ONS show a welcome fall in the headline rate of unemployment (down by 0.1 percentage point to 7.8% over the three months to February 2011), and on a number of other measures of unemployment. But not all unemployment measures showed a fall.
Youth unemployment on the internationally-accepted measure (which, as ONS points out, “in accordance with international guidelines” includes “people in full-time education [...] if they are looking for employment and are available to work”) rose by 0.1 percentage point to 20.4% over the three months to February 2011.
However, the ONS now appears to have – to some extent – acceded to Iain Duncan Smith’s calls for a different approach to reporting youth unemployment. Page 6 of the April 2011 Labour Market Statistics report includes the following addition to how it reports youth unemployment. It states:
Excluding people in full-time education, there were 666,000 unemployed 16 to 24 year olds in the three months to February 2011, down 15,000 from the three months to November 2010. The unemployment rate for 16 to 24 year olds not in full-time education was 18.6 per cent, down 0.6 percentage points from the three months to November 2010.
The CIPD has been quick to take credit for this. CIPD public affairs manager Anna Wallace said via Twitter:
Interesting ONS have added para on youth unemp measure (p6) http://bit.ly/eXN8az Seems to follow #CIPD’s call http://bit.ly/fg0662 #jobs #hr
Thanks for the references, and the analysis, Michael.
On this occasion, I think it was IDS echoing John Philpott, rather than the other way round. We shared John’s paper with them last week.
In terms of David Blanchflower’s comments, I’d come back to John’s key point. It is just as big a distraction from the real problem to focus on overblown rhetoric about “lost generations” etc.
I’m sure David and John don’t differ too much in their overall analysis of the situation. But David and others aren’t doing young people struggling with unemployment any favours by focusing on “million milestones” etc. Even in good times, young people swing in and out of employment more quickly than their older counterparts – they’re young and experimenting with the labour market. The really serious problem we need to address is not the fluctuations in short-term employment prospects, but the stubborn 9-10% rate of youth unemployment that endures whether times are good or bad. These are the young people that really suffer from unemployment. It is the bit of the iceberg below the surface we need to focus on most.
Robert Blevin
CIPD
Thank you very much indeed for taking the time to comment, Robert.
I have now updated the text of the post above to reflect what you have said here.
Kind regards
Michael
I do disagree with Robert I am afraid. There is a large body of research suggesting that long spells of unemployment while young do leave permanent scars. this started with work by David Ellwood in the US and has been shown to be the case by various papers by Paul Gregg and in more recent ones by David Bell and myself. Spells of unemployment when young raise the probability of being unemployed, lower wages and worsen health later in life.
The problem with Robert’s view is supposing he is wrong and I am right and it is a problem. I do something about it and he does nothing. there is the lost generation.
I agree that the big problem is the most disadvantaged group who are the ones most likely to be hurt but we have unemployment of 20% even among graduates who now have these large debts. A major problem also is that this is a very large cohort so it is 20% of a really large number. Complacency saying there isn’t a problem doesn’t help.
What if the CIPD is wrong, which I suspect it is?
You can’t ignore the evidence and wish it wasn’t so.
Danny Blanchflower
I have some concerns re the accuracy of the ONS count. I know of a number of unemployed young people (graduates) who are not registered unemployed and not claiming benefits. Relative affluence may be masking the real figures. They as well as the many young workers who are in low skills roles are facing an up-hill struggle to gain valuable skills and business-relevant experience. The demographics clearly show a that this cohort will be of critical strategic importance in the medium to long term, especially as the country comes out of recession. If they do not have the right skills or experience can we rely on employers to invest in them in the future?