Paul Hajduk
PAYdata Blog, January 26th 2011

People have a habit of choosing statistics that support their case to back arguments. Governments are no different. The Retail Price Index was the historical measure of price inflation, but the Consumer Price Index became the measure of choice (and it’s no coincidence that it’s usually the lower of the two measures). Successive Governments have also applied the same tactic to the unemployment statistics.

Unemployment

The traditional measure of unemployment was just that, the number of people who were unemployed. The Office for National Statistics uses the International Labour Organisation (ILO) definition of unemployment to produce the official statistics. This definition includes as unemployed the following categories of people (who are over the age of 16):

• Anyone who is currently out of work, wants and is actively looking for a job in the last four weeks and who can start work in the next two weeks; and
• Those who are out of work but have found a job which they will start in the next two weeks.

Many countries use this definition. Eurostat and the OECD also use it. What the definition distinguishes between is those people who want to work but are not currently doing so, and those people who do not have a job and do not want one.

Claimants

The number of people in the UK claiming Job Seekers Allowance (or its predecessors) makes up the claimant count. It cannot, officially be seen as an alternative measure, because it does not meet the definition of unemployment that has been agreed internationally. However, it is the preferred measure of successive UK Governments and perhaps this is because it is always lower than the total unemployment count. Some might argue that this is because it is also much easier to influence.

Impact of Government policy

Reducing unemployment means changing the level of economic activity. Government can reduce claimant levels by simply changing the rules. If there are less people eligible to claim benefits, then claimant levels go down and so a bad news story can become good. The other “advantage” of claimant count from a Government perspective is that unlike unemployment, which has a widely agreed definition, the calculation of claimant count is open to change. In the 1980s and 1990’s the UK Government made over 30 changes to the calculation all of which had the affect of making the number fall.

The difference between the two measures can be seen from recent statistics for the UK (all figures in thousands of people):

• Unemployment for the period September – November 2009 was 2,460 which increased to 2,498 for the same period in 2010
• The claimant count was 1,616 in December 2009 and decreased to 1,456 by December 2010

In conclusion

The phrase “There are three kinds of lies: lies, damned lies, and statistics" has all but passed into common usage. This is true of unemployment statistics based on the claimant count.

These purport to show the “true” picture but deliver an easily manipulated number which fails to meet internationally agreed standards.

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