Rising employment: just not for young people.
This week’s labour market statistics contained a lot of good news. They show unemployment down in the most recent quarter by 45,000 and employment up by 100,000. In fact, there are now more people in work in the UK than there were in 2006, before the recession began. But the way this growth in employment is distributed across age groups tells us a lot about the problems young adults face in finding work.
When labour market statistics are discussed, the focus tends to be on the number of people unemployed, and the unemployment rate. So, for instance, it is well known that some 2.6m people are unemployed, but less well known that 29.2m people are in work. Since the recession began, unemployment has risen by around 1 million. Employment has fallen by around 300,000.
Part of this mismatch could be to do with people moving into the job market having been economically inactive. In this way the number of unemployed could rise more quickly than the number of people employed falls. But the real reason is population growth. Since 2001, the number of 16-64 year olds in the UK has grown every year, and was 2.5m higher in 2011 than in 2001.
The number of people in work has grown at different rates for different age groups. Compared to the last quarter an additional 2,000 16-24 year olds are in work, 70,000 25-34 year olds, and 50,000 more people aged over 50 in work. (The number of 35-49 year olds in work actually fell over the period in question)
If we take a longer view, a very interesting pattern emerges. The graph below looks at the changes between 2001 and 2011 in the number of people employed, unemployed and economically inactive.
The graph looks at four age groups – 16-24 year olds, 25-34s, 35-49s and 50-64 year olds. It looks at how the numbers in each age group who are employed, unemployed or economically inactive have changed since 2011. The total population change for each group is also included for comparison. It does not include people aged over 65, as this group does not suit the analysis (few, if any, are unemployed), but the number of over 65s in work almost doubled in this period, to 880,000.
Graph 1 - Change in population and work status by age groups between 2001 and 2011
The groups are age groups not age cohorts, so are made up of different people at each point in time. (2011’s 16-24 year olds were at school in 2001). So we are looking not at what has happened to individuals over the decade, but how the population and workforce as a whole has changed.
The most obvious thing about this graph is how utterly different the changes over the last decade have been for each age group. At one end, the 16-24 year old group has seen an increase of 900,000 people in total. The number of 16-24 year olds unemployed has risen by 400,000. The number “economically inactive”, which, for this group, will include a lot of students, has risen by 800,000. The number in employment has fallen by 300,000. This bears repeating – there are 900,000 more 16-24s in the UK than ten years ago and 300,000 fewer in work.
Among 25-34 year olds, the number in employment actually fell, by almost 200,000. The number unemployed rose by 200,000. The total population of this group also fell, by around 100,000.
This is in marked contrast to the next age group in the distribution. There are 400,000 more 35-49 year olds in work now than a decade ago. There are also 200,000 more unemployed people of the same age, while the number of economically inactive has fallen slightly. So, of the total population increase of 600,000, two thirds are in work.
But changes among the 50-64 age group are of a different order. The total size of the population rose by 1.1m, and there are around 1 million more people of this age in employment. A rise of just under 200,000 in the number unemployed is almost offset by the fall in the number of economically inactive people of the same age.
So both the young adult and older work age adult populations grew in the last decade but the labour market outcomes were very different. In fact, the employment rates of young adults and 50-64 year olds have swapped round. Whereas in 2001 a higher proportion of 18-24 year olds were in work (68% compared to 62%), by 2011, a higher proportion of 50-64s were working (65% compared to 57%).
One final point emerges from this. In total, the number of people in employment in the UK was some 1.4m higher in 2011 than 2001, despite the recession and the subsequent leap in unemployment. All of the growth was among over 35s and of these additional 1.4m people in work, 1m are aged 50-64. None of it was among the under 25s.
None of which is to say that the over 50s are somehow stopping the under 25s from finding work. This kind of analysis cannot demonstrate that and in any case the rising number of people aged over 50 presumably says more about people choosing to stay in their current jobs and retire later than competition between generations for “new” jobs.
But the point is that with a growing working age population one would expect employment to rise, so that fact that it has risen gives only small cause for cheer. Moreover, increased employment in the aggregate does not mean increased employment for all groups and young adults in particular have seen a huge deterioration in their employment chances over the last decade.
The most recent figures do not change this picture. Of the 100,000 increase in employment compared to three months ago, only 2% is in the 16-25 age group. So employment is up, just not really for young people.