Page last updated at 00:17 GMT, Thursday, 12 November 2009

Measuring unemployment: A job in itself

By Joanne Babbage
Business reporter, BBC News

Unemployed person
Official unemployment measures differ by almost a million people

Working out just how many people are actually unemployed is a bit of a holy grail amongst employment experts.

This is because there are two main ways of calculating unemployment: the Claimant Count level and the International Labour Organisation (ILO) level.

The Claimant Count level is currently 1.64 million people, while the ILO unemployment level is currently 2.46 million people.

"In the past, we always just looked at how many were signing on as an indication of the unemployment rate, but that measure has become more and more complicated, " says John Philpott from the Chartered Institute of Personnel and Development (CIPD).

It's important to remember that the Claimant Count is a welfare count and not strictly an unemployment count

John Philpott, Chartered Institute of Personnel and Development

"Larger numbers don't sign on now or have been moved on to other benefits," he adds.

"Therefore it's been increasingly suggested that we use the ILO results, which conform with the international definition of unemployment, which is anyone jobless who's actively looking and available for work in the two weeks before the survey is compiled."

Job hunters

ILO unemployment is based on a quarterly sample survey of about 53,000 households living at private addresses and seeks information on respondents' circumstances before the interview.

Because it is based on a survey, it is subject to sampling errors.

Not all jobless people will say they are actively looking or available to work, so they will not be included in the headline figure.

Students looking for part-time work are included in the ILO measure

Some people who are students and in education are looking for work and are "unemployed" because they say on the survey that they are actively looking for work. This work may actually include part-time jobs while they are studying.

Also included are people who are only studying because they cannot find a job and who would give up education to work.

And what about those who might want to work, but don't consider themselves unemployed?

Two million people, including housewives, carers and the short-term sick, who are not well enough to seek work in the time period considered, are just some of those described as economically inactive.

"If there was better child care or elderly care available, a proportion of these say they would get work, so they don't look for work, because they feel the conditions don't exist for them to be able to," says Mr Philpott.

Counting claimants

The Claimant Count measures the number of people receiving Jobseekers' Allowance (JSA).

Jobcentre Plus
1.64 million people are currently claiming Jobseeker's Allowance

You are entitled to Jobseekers' Allowance if you have paid enough National Insurance (NI) contributions for six months. However, after six months, it usually becomes means-tested.

John Philpott argues that those who might be described as "better off" are likely to come off the count at this point.

Anyone who has savings in excess of £6,000 will get a lower payment, while those with savings over £16,000 will probably not qualify.

Also, if the claimant's partner works more than 24 hours a week, the claimant is not eligible for JSA.

Those who were self-employed before finding themselves out of work might not pay the same class of NI contributions as those in employment. That means they automatically go straight on means-tested JSA.

Eligibility also hits people working part-time whose NI contributions fall short.

Men aged between 60 to 64 may be better off claiming Pension Credit than JSA, the DWP suggests, so if they opt for Pension Credit but are still looking for work, they will not appear on the claimant count.

JSA is not normally paid to 16 or 17-year-olds, apart from in exceptional circumstances, so the vast majority in this age group will also not appear in the figures.

Successive governments have changed the criteria for those who are eligible for benefits. This has happened approximately 30 times since 1979. This makes the historical figures nearly impossible to compare.

'No foolproof measure'

"It's important to remember that the Claimant Count is a welfare count and not strictly an unemployment count," argues John Philpott.

1970s dole queue
The criteria for benefits eligibility has changed 30 times since 1979

"Historical changes in the benefit rules show falls and rises in claimant unemployment created purely because of a change of government. There isn't really any foolproof measure of unemployment - but what we have used together are a good indicator," he says.

So, should we start analysing six different measures of unemployment as they do in the US?

John Philpott argues that we should also look at the amount of people who say they are working part-time because there are no full-time jobs, which is one of the six used in the US. This measure is a good indication of how strong the labour market is at any one time, according to Mr Philpott.

Well, you can find that number in column 21, of chart three, on page 47 of the latest Labour Force Survey released by the Office for National Statistics, which includes the ILO figures.

That shows nearly a million people in the UK said they were working part-time because they could not find a full-time job, in the three months to September.

Is yet another measure of unemployment needed, though? As long as some jobless people are unable to or choose not to claim benefits, and a survey includes full-time students looking for part-time work, it seems the answer is probably no.

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