LETTER:Unemployment figures mean what you want them to mean

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The Independent Online
From Dr David Taylor

Sir: Phillip Oppenheim (letter, 24 March) is right to say that the monthly count of unemployed claimants currently produces similar totals to the Labour Force Survey's ILO count (letter, 24 March). However, this is something of a coincidence. Although there is overlap between the two counts, people included in the latter are missing from the former and vice versa.

The LFS count includes more long-term unemployed people than the claimant count, but fewer short-term unemployed. It also includes more women than the claimant count, but tends to include fewer men. This is not surprising. The definitions of unemployment used in the two counts, as well as their timing, are very different.

This is not to say that one count is always right and the other always wrong. If interpreted carefully, the claimant count is a useful early indicator of the direction and speed of unemployment change. It is quick, cheap, and available at very high levels of geographic disaggregation. However, because the number of unemployed claimants is influenced by benefit legislation and the way benefits to unemployed people are administered, it is not a reliable measure of the actual number of people unemployed. This is where the LFS comes into its own.

Like most definitions, the LFS definition of unemployment is arbitrary but at least it is clear and, unlike the claimant count, its coverage has remained largely unchanged since spring 1984. But the fact that the Labour Force Survey count of unemployment conforms to ILO recommendations does not automatically mean that it is suitable for all purposes.

For example, if you want to know about the size of the potential labour force, then it is sensible to take account of the - roughly one million - people who, while being classified as "economically inactive" by the LFS, nevertheless say they would like a job if one was available, and are free to take up such a job. Typically, most of these people are women and early retired men keeping half an eye open for suitable part-time work. They are the very people who, back in the Eighties, the Manpower Service Commission used to tell us would help defuse the demographic "time-bomb" caused by the falling numbers of young people.

In short, the definition you chose, as ever, depends on the information you want.

Yours sincerely,

DAVID TAYLOR

Local Economy Policy Unit

South Bank University

London, SE1

24 March

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