A claimant count quandry

Posted by Joe Rennison on Jun 17 10:54. 2 comments | Share

There is a bit of a debate developing regarding Wednesday’s employment data and in particular the significant increase in the claimant count.For example, FT Alphaville quoted Howard Archer of IHS Global Insight saying: More…

There is a bit of a debate developing regarding Wednesday’s employment data and in particular the significant increase in the claimant count.

For example, FT Alphaville quoted Howard Archer of IHS Global Insight saying:

The 19,600 spike up in May in the more timely claimant count measure of unemployment is worrying, as it cannot be fully put down to recent changes in the benefits system. This is the third successive rise in claimant count unemployment.

However, there’s also a note floating about from Philip Rush of Nomura, arguing that the rise in the claimant count was not worth focusing on at all. It is all down to changes in the benefits system.

Indeed, as Rush noted (our emphasis):

But the relatively bleak performance on the claimant count measure is largely the result of classification issues. Specifically, since 25 October 2010, lone parents with children aged 7 or over became eligible to claim jobseekers allowance instead of income support. Experimental statistics for Great Britain (usual headlines are for the UK) show that in the three months to April, the GB claimant count increased by 16.2k, but excluding the new lone parent claimants, the claimant count declined by 4.9k. Further distortions are likely, owing to this and the retesting of incapacity claimants. Classification issues do not make a real change to the labour market, so we are currently inclined to pay more attention to the healthier LFS measure.

Incidentally, an interview with ONS statistician Bob Watson, conducted by Market News International in April, predicted the claimant count would indeed continue to rise as a result of further changes to the benefits system:

We’re expecting the audit of those people on incapacity benefit to result in a third of those on Incapacity Benefit (IB) eventually moving to claim Jobseeker’s Allowance. The reassessment will take three years and the change will be fairly small to begin with – but eventually it could mean 30,000 people moving from IB to work or Jobseeker’s Allowance per month.

Though, the interesting point is they didn’t think these changes would begin impacting the claimant count until at least November.

So which is it? Is the increase in the claimant count irrelevant because it is merely the expected result of changes to the benefits system, or is the large increase possibly due to more worrying factors?

It is a question to be answered by postulation because sadly, the statistics do not track movement within the job market, making it difficult to tell exactly where the rises and falls come from. So, answers on a postcard (or you can just post underneath).

Related links:
Unemployment falls but claimant count rises – reaction – The Telegraph
High flying UK cities trade on strengths – FT

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