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15 March 2011

IDS’s puzzling letter to the ONS

If you want a distraction, quibble about the data.

By David Blanchflower

We are publishing here for the first time a puzzling letter from Iain Duncan Smith to the Office for National Statistics, asking for the focus to be placed on the number of unemployed youngsters not in full-time education, ignoring those that are. This looks very suspicious, given that the latest labour market data is to be published tomorrow — in his position as a secretary of state, he has had an early look at the data release, which suggests bad news. Could it be that he is getting his retaliation in first before youth unemployment hits the million milestone? If you want a distraction, quibble about the data.

There are a few main points to be made:

1) Since the coalition took office in May 2010, the number of unemployed young people has increased by 45,000. This is made up of a decline in the numbers who also report being full-time students looking for a part-time job of 20,000 but an increase of 65,000 of those not in full-time education. The unemployment rate is 19.4 per cent of those not in full-time education. My analysis of the data with my colleague David Bell shows that the student labour market operates much like the regular labour market and should not be ignored.

2) A recent release from the ONS also showed that the unemployment rate of recent graduates has risen sharply. At the start of the recession, the unemployment rate for new graduates was around twice that of the UK as a whole (10.6 per cent compared to 5.2 per cent). By the end of the recession, the rate for new graduates was 2.3 times higher (18.5 per cent compared to 7.9 per cent).

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3) The point of counting full-time students who are looking for a part-time job is that they are part of the labour supply. Full-time students who hold part-time jobs are also included in the employment count. IDS hasn’t suggested we remove them from the employment count. I wonder why not?

4) The likelihood is that there is going to be a big increase in the numbers of students looking for part-time work because of the increase in tuition fees. This is something we want to count, not ignore.

5) All of the growth in employment in the UK over the past year has been in part-time employment. Between October-December 2009 and October-December 2010, part-time employment increased by 224,000 while full-time employment fell by 6,000. So is it one rule when you like the answer and another when you don’t, Iain?

It would be better to try to lower youth unemployment rather than fiddle with the statistics. I will be watching the data release tomorrow with interest and will report back.

Download Iain Duncan Smith’s full letter here