No mystery over unemployment, despite Yvette Cooper

When a minister calls an inquiry the day before key statistics are due to appear, smell a rat. Sniff even harder when the inquiry is leaked to a few journalists, and nothing appears on the departmental website.

 So it is with Yvette Cooper, Work and Pensions Secretary, who let it be known last Tuesday that she was calling for an urgent inquiry into the unemployment statistics. Her concern is what she believes to be a discrepancy between the unemployment figures and the numbers signing on for unemployment benefit.
“Ministers have commissioned an urgent analysis into the discrepancy” DWP officials told the FT. But is there a discrepancy? Or were these worried ministers simply trying to create a diversion the day before the new unemployment figures emerged? With this Government’s track record, a degree of cynicism is permissible.
The figures come from different sources. Unemployment is measured by the International Labour Organisation’s measures, and is reckoned to be one of the most reliable pieces of data the Office for National Statistics produces. Benefit claimants come from the Labour Force Survey.
Not everybody who is out of work claims benefits, so there is usually a gap between the two counts. But ministers say that the gap has widened without explanation. The inquiry is supposed to provide that explanation.
But is there really any mystery to be solved? An analysis by the Institute for Fiscal Studies suggests not. The unemployment figures published on August 12 - the day after Ms Cooper leaked her anxieties to the FT - showed an increase of 220,000 in the three months to June 2009, to a total of 2.43 million.
The numbers seeking jobseekers’ allowance have risen more slowly. It now totals 1.58 million, after a rise of 24,900 in the month of July. That looks like a big gap, but a quick look at the year-on-year figures tells a different story. The unemployment count is up by 750,000, the claimant count by 709,000 (figures from DWP).
That’s hardly a difference worth bothering about. It is easily explained by assuming that some people who have lost their jobs are second-earners who have not signed on but are relying on their partner’s earnings. Or, as Nigel Meager, Director of the Institute of Employment Studies, told the FT, that middle-class white-collar workers, with savings and a redundancy payoff, are choosing not to claim, or not to claim yet.
The gap is hardly large enough to justify a hue and cry, as the IFS points out. These two measures can lead and lag, depending on the state of the economy. Throughout late 2008 and early 2009, the claimant count was rising faster than the ILO count of unemployment. Now it’s rising more slowly. But it may well catch up this autumn.
All in all, there’s no mystery, and no need for any inquiry. In any case, who’s to carry it out? If Ms Cooper has problems with either set of data, it is to the monitoring and assessment team at the Statistics Authority that she should direct her inquiries. That’s what they do.
But a vague call for an inquiry, without specifying who is to do it, what it is supposed to be about, and when it will report, smacks of spin. Or desperation. In either event, it didn’t work. The rise in unemployment was widely reported, as it deserved to be.