A broader view of labour market statistics in Northern Ireland
Posted on August 14, 2013 by Paul Mac Flynn
The unemployment rate in Northern Ireland fell below that of the UK for the 3 months to the end of June this year. This is welcome news, but as with all economic and labour market data, a quick glance never reveals the true story.
While the numbers unemployed fell by 6,000, the numbers employed only increased by 4,000 which on the face of it would lead you to believe that 2,000 people had disappeared from the labour market, but they haven't. They may have disappeared from headline statistics, but they remain in the background. The numbers of people both employed and unemployed are classed as "economically active", that is they are either have a job or are actively looking for one. This combined group of economically active people in Northern Ireland actually declined by 2,000 people in the last three months. At the same time the numbers of economically inactive people, those out of work and not seeking work, grew by 6,000.
The economically inactive includes people who are retired, those raising a family at home and many people who voluntary remain out of the active workforce. However there is the possibility that there are some people who have fallen into this group in less desirable circumstances.
In the US in recent years, many labour market economists have highlighted that decreases in unemployment were mostly due to long-term unemployed people leaving the workforce. That is people who have been looking for a job for some time and may just simply have given up. In Northern Ireland we have seen very large increases in long-term unemployment since the beginning of the crisis. The numbers of people unemployed for more than 12 months increased by 5,000 since this time last year.
If we look deeper at the make-up of people who are categorised as economically inactive we see that some people are labelled "economically inactive - who want work". This is made up of people who are no longer counted as employed or unemployed, but still want to work. In the US they are referred to as discouraged workers, here in Northern Ireland the level of economically inactive people who want to work increased by 3,000 in the last three months. We may be seeing people move from the category of long-term unemployment into the category of economically inactive. News reports tend to focus on the first part of this transition rather than the latter, which should be of equal concern.
All of the figures quoted above reflect the first estimate for the second quarter of this year alone, and the picture may change substantially in another three months. The key point to be made here is that when assessing the health of the labour market, a quick scan of the headlines is never enough. Unemployment and employment are just two classifications in the wide spectrum of the labour market, in order to keep really informed we really need to take a much broader view.