LETTER:Unemployment figures mean what you want them to mean

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From Dr John Wells

Sir: That one million or more people are missing from the official unemployment count (Letters, 22 and 24 March) - whether the claimant or Labour Force Survey (LFS) measure is used - can be demonstrated as follows.

The household-based LFS recorded 2.679 million unemployed in summer 1994, defined as those who were out of work, would like a job and had been looking for work and were available to start work. Of this total, 1.063 million (roughly equally divided between men and women) were not in receipt of unemployment-related benefits - for various reasons such as failure to establish entitlement (due to low earnings, short employment spell) or exhaustion of entitlement to unemployment benefit (but ineligible for income support because spouse was working or on income support).

In addition to the LFS total, there were 907,000 people receiving unemployment- related benefits but not part of the LFS count: 332,000 combining small number of hours' work with benefit (permitted by the benefit rules but excluded from the LFS as the latter excludes those working one or more hours) and 575,000 excluded from the LFS count because they did not meet its job search and availability criteria. Yet all of the latter, since they are on benefit, are satisfying the benefit authorities as to their "capability, availability and active search for work".

So, either we accept the claimant total, as the Government is keen to do - and we find in the LFS an additional one million unemployed not receiving benefits. Or we take the LFS total - in which case we have to add in nearly one million claimants.

Note also that, since 1979, 1.1 million men have disappeared from the labour force - ie, they are neither in employment nor counted as unemployed. Some of this is explained by longer schooling and voluntary early retirement. But most represents hidden unemployment - supported, in part, by invalidity benefit (male), recipients of which escalated from 459,000 to 927,000 between 1979 and 1992.



Faculty of Economics and Politics

University of Cambridge


25 March