Labour Force Statistics: How good are they?

Acknowledgement

I am grateful to ONS for providing me with the numbers that populate the table. ONS warns the numbers are experimental. I have assumed this is why the table’s quarter-end counts may not reconcile to the statistics separately released by ONS at the end of the Sept 2012 quarter.

 A 3-state workforce

The table shows that ONS uses a 3-state model – that is workers are shown in the table as being in one of three states:  in work, unemployed or inactive. Workers are individuals between the ages of 16 and 64.

People classed as in-work is the sum of those in employment, those in self-employment, and those on government workfare schemes. People classed as unemployed are those actively seeking work, even if they are not claiming out-of-work benefits.  People classed as inactive are those of working age who are not employed/self-employed and who are not seeking work.

Transitions

The table shows the transitions workers have made from one state to another during the quarter.

For example, the In-work row indicates that 28.467 million were in work at the start of the quarter (ie on 1 July 2012). Reading the figures in this row, we can determine that 27.596 million of those in work at the start of the quarter were still in work at the end of the quarter (ie on 30 Sept 2012). We can also see that 395,000 of those in work at the start of the quarter became unemployed and 476,000 became economically inactive.

Similarly, with the next row down, we can see that of the 2.545 million unemployed workers at the start of the quarter 591,000 found work, 1.564 million remained unemployed, and 390,000 became inactive.

The next row down shows that of those inactive workers at the start of the quarter, 437,000 found work, 508,000 declared themselves to be looking for work, whilst 8.017 million continued to be economically inactive.

A 4-state model

The inclusion of workfare participants in the In-work state adds to the controversy that surrounds workfare schemes. Including workfare participants in the in-work count does not assist the public or decision-makers to evaluate how well these schemes help the participants into work.  For this to happen, I suggest ONS should adopt a 4-state model with the workfare count as the fourth state. Transitions to and from this state could then be measured and published.

Conclusions

It appears that transitions between states for the UK labour force have not historically been routinely published.  ONS now appears to be investing effort to address this issue. So far the transitions data it has collated are experimental. ONS appears currently to be developing its methodology, presumably so that transitional flows reconcile to the separately determined end-point statistics. I suggest a further improvement would be for ONS to adopt and publish a 4-state transition analysis which includes workfare as the fourth state. The improved accountability will assist taxpayers to assess whether DWP is effective in helping people into work. Historically, this task may have not been easy for analysts and taxpayers.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s