Official Report: Minutes of Evidence

The Chairperson (Mr Swann): Members, I welcome from the Northern Ireland Statistics and Research Agency (NISRA) Dr James Gillan, senior principal statistician, and Dr David Marshall, director of sources. James and David, you are very welcome this morning for our regular briefing. I advise that you have 10 minutes for your briefing. James, over to you.

Dr James Gillan (Northern Ireland Statistics and Research Agency): Thank you very much, Chairman. I will try to get through the slides as quickly as I can. I am assuming that the overall purpose of this is to give you a feel for how the labour market is performing and to answer any questions that you might have about it.

The most recent results on the labour force survey (LFS) were published last week and referred to June to August 2015. The estimate of unemployment at that time was 6%. That is down slightly from 6·2% over the quarter and down from 6·1% over the year. We are still above the UK rate of 5·4%. The main point to take out of this is that we have been at between 6% and 6·2% in each of the last eight months, with the exception of, I think, one of the months April to June, when we were at about 6·5%. So it has been relatively constant, and our position below the UK has been sustained throughout that period as well.

The next graph shows you the rate — it is always important to put this in a longer historical context — over the last 23 years. Compared with 1993, when we were over 12%, our current rate of 6% is not as bad as it has been historically. The other point to take out of that graph — I should have said that Northern Ireland is the blue line, and the UK is the red line — is that our recent peak unemployment rate was in the period from November 2012 to January 2013, when it was 8·3%. Since then, over the last two years and seven months, it has fallen to 6%. We regard that as a statistically significant real improvement in unemployment, above and beyond what you would expect from the natural variation out of the —

The Chairperson (Mr Swann): Sorry. Fra, you are looking in.

Mr F McCann: It is certainly interesting when you talk about it being 12% back in 1993. One of the things that we have tried to get to is the quality of the jobs coming in. Back in 1993, there were quite a lot of jobs in manufacturing. Most of those high-quality jobs have been lost. Does it tell you about the quality of the jobs coming in? We live in a very low-pay economy. It is about trying to get that match.

Dr Gillan: I have a slide on that later, Mr McCann. It will not give you all the detail, but it will maybe throw a bit more light on that one.

I will just finish off on unemployment by moving to the jobseeker's allowance. You are perfectly right: people are flowing off the unemployment register. Where are they going? What is the impact on employment? What jobs are there? The next graph shows in more detail — again, Northern Ireland is the blue line, and the UK is the red line — the claimant count, which is a much more sensitive measure of unemployment. You can see that there was a very rapid increase in unemployment in the two years after 2007 and then there was a gradual climb. Since, again, the first quarter of 2013, there has been an improvement in the claimant count register/jobseeker's allowance measure of unemployment. We are down now to about 40,700. If you are asking whether things continue to look good, I would say that, in the last six months, 750 persons, on average, have come off the claimant count register for jobseeker's allowance. In the six months prior to that, we had about 1,100 coming off. The last three months have seen an average of about 1,000, so it has dipped from April to June, and now the flows off are starting to pick up.

That is our unemployment situation, and, as you will be aware, we have structural issues around economic inactivity. Because we have a young population, a lot of people are in education. In this graph, we have taken out the young people in education to look at our position relative to the regions of the UK. Northern Ireland is second from the right, and the purple bar illustrates that we have the highest proportion of people who are inactive for reasons of sickness or disability. I know that everybody is well aware of this, but that graph highlights it.

Mr Flanagan: Does the section called "other" include people who cannot get work? Where do people who cannot get work but are not entitled to claim jobseeker's allowance and other benefits like that fit in?

Dr Gillan: Some of them are unemployed under the official International Labour Organization (ILO) definition. Other people, if they have not been actively seeking work or have not been available for work in a period, are defined as economically inactive, so you could have some people in there who are receiving jobseeker's allowance.

Mr Flanagan: After six months, you cannot qualify for contribution-based jobseeker's allowance, so you are technically deemed to be economically inactive. Where would you fit into the graph?

Dr Gillan: You will not get contribution-based jobseeker's allowance, but I understand that you will still get an unemployment-related benefit.

Mr Flanagan: No, you do not.

Dr Gillan: This graph will include some people who are in receipt of jobseeker's allowance —

Mr Flanagan: Yes, but I am trying to figure out where the people who are not entitled to it are on your graph.

Dr Gillan: They could be in the unemployment figure if they are available for and seeking work in the reference period for the household —

Mr Flanagan: So even though they are not getting benefit, they show up as unemployed.

Dr Gillan: They are still being counted as unemployed under the ILO definition. There will also be people counted as inactive who wish to work but have not been actively seeking work. They are kind of discouraged workers, and that group is about the same size as the unemployed. There is this wider group of unemployed.

Ms Lo: I am little puzzled. You said that you took out the student population, but you have kept the retired people as economically inactive: what is the rationale for that?

Dr Gillan: This is the age 16-plus population. We are including people whose reasons for inactivity are looking after the family or home, sickness or disability or if you are retired or in education. That is the formal ILO definition of what it means to be economically inactive. You can look at the working-age population — 16 to 64 — and that drops out the retired group. You see a kind of similar —

Ms Lo: Those people are under 65, but you —

Dr Gillan: You can cut it another way and take out the retired group, but the formal ILO definition for the 16-plus group includes retirement as a reason for not being economically active.

Ms Lo: Are those people over 65? You are saying anybody from 16 —

Dr Gillan: You can either cut it to 16-plus, which is everybody aged over 16 and includes people over 65, or you can look at the 16-to-64 population to see what is going on with the people who are pre-retirement. We can present it either way.

Ms Lo: Does that graph include people over 65?

Dr Gillan: It does not say on it, but I think that it is a 16-plus graph.

Mr Ramsey: James, forgive me if this is in the slides. Do you have a slide showing the economic inactivity and unemployment rates by council area for youth unemployment?

Dr Gillan: That is in the presentation later on. We have youth unemployment by area.

Mr Ramsey: Do you have economic inactivity rates by council area?

Dr Gillan: I am not sure whether I have it with me.

Mr Ramsey: Can you forward it to us?

Dr Gillan: I can forward it to you.

The Chairperson (Mr Swann): OK. Sorry, James.

Dr Gillan: So that is economic inactivity.

The next slide tries to answer Mr McCann's question. It is a busy slide, so I might just take a minute to explain it.

The reference point on the left-hand side of the graph is set at zero and is the position in January-March 2008. The black line shows the changes in total employment at each quarter from then until now. So it is set at zero, which was about 794,000. We saw peak employment occurring shortly after that, and then it plummeted by about 43,000 over the year to May 2009. Since that, it has been gradually picking up. If we look at January to March 2008, close to the period of peak employment, we see that we have surpassed that now. We have recovered a lot of the losses since January-March 2008. The Northern Ireland rate is about 1·1% above the peak, or 2·8% above the position at the start of that graph.

What is interesting in the graph is that it also breaks down the growth or changes in employment by whether it is full-time male, part-time male, full-time female or part-time female employment. You can see below the axis — the horizontal line — that there is a lot of dark blue, and that is full-time males. Most of the jobs lost have been in full-time male employment. We are just coming back to where we were on full-time male employment in January-March 2008.

As well as there being job losses throughout that period, some people have gained jobs. The light blue bar just above the axis represents part-time male employment, so there has been growth in that. Above that is a slightly heavier shade of pink that represents female full-time employment, so there has been also growth in female full-time employment. Above that again is a lighter shade of pink that represents female part-time employment. What we are saying is that there has been a loss in male full-time jobs and growth in male part-time, female part-time and female full-time employment.

Self-employment is represented by the orange-tipped bar, and you can that there has been a mixture of losses and gains in self-employment.

It shows that a lot of the growth has been in part-time jobs. These are people who declare themselves as being part-time employed. We are not saying how many hours they work. They describe themselves as working part time.

Mr F McCann: I take it that the downward bar in blue for male full-time employment from, say, 2008 near enough represents the collapse of the construction industry.

Dr Gillan: A lot of that will be employees in the construction industry. It will also be the self-employed, which is represented by the orange bit, although that was not as marked immediately after the collapse. It was not until later on, in 2012-13, that we saw a lot of declines in self-employment. It was not only those in the construction industry but those involved in the supply chain and in the manufacturing side of things making doors, windows, breeze blocks and so on. We have not got that information with us today, but that is what our experience was in the past: a lot of this was driven by the manufacturing and construction sector side of things.

The Chairperson (Mr Swann): James, I know you say that you do not have it with you, but is there any indication that the increase in part-time female and part-time male employment was because of zero-hour contracts?

Dr Gillan: In our means of measuring zero-hour contracts through the labour force survey, we follow the Office for National Statistics (ONS) lead. They tried to do it through the labour force survey, but there were measurement errors over what people understood to be a zero-hour contract. In fact, as soon as they started to mention it, it became more popular. You could see the rates going up. The ONS is trying to measure it through a business survey, but that is only at the UK level, so we do not actually have a measure of that here, but it is likely to be tied in to what we are seeing here.

Mr Flanagan: James, is there any chance of getting that slide in tabular form? It is quite complicated. I cannot follow the graph at all; I am not much of a visual person.

Dr Gillan: We can do that. No problem.

Ms Lo: It is a very good graph.

The Chairperson (Mr Swann): It is.

Dr Gillan: It is not as marked as the UK one. The UK one is much clearer. We have looked at it on the employee jobs measure — the business survey measure. We have never been able to see it quite as clearly, because the business survey measure says that you are part-time if you work fewer than 30 hours a week. It is not terribly sensitive, but this kind of illustrates it.

Ms Lo: It is really very good, but I see numbers of self-employed reach quite a peak in 2014 and no self-employed in 2015. Have the numbers dropped off, or is it just that there is no new growth in it?

Dr Gillan: These are changes relative to January to March 2008, so it probably means that it is neither increasing or decreasing. It is kind of staying fairly constant if it is not appearing there. The orange bit looks as if it is suggesting that it is decreasing towards the end. The self-employed figures are volatile; they jump about quite a bit. The UK has had a large growth in self-employment, but we have not been seeing that here. That is where a lot of their jobs growth has picked up, but we are not seeing any evidence of that. I should caution that this graph is all hinged around January-March 2008, when there was peak employment, if you like. There is an argument that we should not always compare ourselves to peak employment if you thought that the boom was unsustainable and was driven by property speculation or a property bubble. I introduce that note of caution. It is all hinged around one fairly unique period. If I provide the table, it might become a bit clearer.

I was going to go on to something that may be of interest to the Committee and which the ONS published last week. It is on something called the living wage, which is not to be confused with the national living wage that the Chancellor announced in 2015 to be introduced in April 2016. This is something different that an organisation called the Living Wage Foundation has calculated, and it is really based around researchers asking people in the population what they think is necessary for a minimum standard of living for food, travel, childcare and so on. They then calculate what a minimum wage should be. They do an out-of-London one and a London one. The out-of-London one for April 2014 was £7·65 an hour. The next slide shows the Northern Ireland position, which is that about 29% of jobs in Northern Ireland had a rate below the living wage. That is also broken down into subregions of Northern Ireland.

As I said, the living wage has no official status as such, but ONS uses this as the kind of methodology that it will use when the national living wage comes in. The point about this is that it is not saying that this is an individual's income; it is about the job. Somebody who is below the living wage could have a spouse or partner who has a wage that is higher than it, or they could have multiple jobs, which takes them over the threshold. Nevertheless, it is an indicator of the type of job that we have in Northern Ireland. We tweeted that last week and got a lot of interest and retweets.

The next slide breaks it down by district council areas in Northern Ireland. About 214,000 jobs altogether, on this estimate, come out with a rate below the living wage. It is workplace-based. The Causeway Coast and Glens is saying that 40% of all jobs there were below the living wage, but there might be a lot of people in the Causeway Coast and Glens who work elsewhere, so it can be misleading to that extent. It relates to where the jobs are.

Mr Ramsey: Have you the full stats for all the council areas?

Dr Gillan: We have, yes. They are published as well. For Fermanagh and Omagh, it is 39% below the living wage, which is 13,000; Mid Ulster is 37%; Lisburn and Castlereagh is 35%; and Newry, Mourne and Down is 35%. It goes through the rest of them, but those are the ones with the highest rates.

Mr Flanagan: James, I saw the statistics broken down by council area, but is it possible to get comparable figures for people who are under 25 and over 25? I looked through the ONS website, and I could not see it. Is there any way that you could get that out of them?

Dr Gillan: We could have a go at it. We cannot produce it ourselves, because we do not have the right —

Mr Flanagan: ONS will have the raw data, but it might not have published it.

Dr Gillan: We can put in a request.

You are probably interested in the overall economic situation. We have a quarterly composite index, which is the output-based measure of GDP. It shows a 1·3% increase over the year, whether that is Q2 2014 or Q2 2015 or a rolling four months, which is a bit more stable, but there is a slight decrease over the quarter. If you look at that decrease over the quarter by public and private, you will see that the private sector increased slightly — by 0·1% over the quarter and by 2·1% over the year. It is actually being dragged down by the change in public-sector jobs, which fell by nearly 1% over the quarter and just over 1% over the year. That is illustrated in the graph; it shows the trend. We reached the minimum in about Q4 2012. If you remember, I said that unemployment started to pick up from early 2013, so this ties in with that; from the end of 2012 to the beginning of 2013, we see output increase. Output has increased by about 3·5% but, on average, it is about 1·3% a year — something of that order. When you compare that with the UK GDP figure, which is the red line, you see that the Northern Ireland recovery has been much more sluggish and was much more delayed than was evident in the UK. Our measure is not GDP, which is a much more rounded measure, but it is very close. The first estimate that the ONS puts out, which is about three weeks after the end of the reference period, is very similar to that measure. It is something that people refer to.

The next slide includes the position for Scotland, which is yellow, and the Republic of Ireland, which is blue. Over the year to Q2, the Republic of Ireland has grown by 7·3%, so it is racing ahead, with an average annual of about 6%. We are lagging quite far behind that.

I have a couple of slides on long-term, youth and those not in education, employment or training. I am conscious that I am close to my 10 minutes, so it will —

The Chairperson (Mr Swann): James, because members are asking you questions while you are presenting, I am content for you to keep going. You are doing well.

Dr Gillan: I know that unemployment by age is of particular concern. The blue line is the 18-24 age group, and the red line is the 25-plus age group. You can see that the 18-24 age group has an unemployment rate of nearly 19% compared to 4% for the 25-plus, which is quite stark. I just need to be clear what I am talking about: that is not 19% of all 18- to 24-year-olds; it is 19% of 18- to 24-year-olds who are either employed or unemployed. It is nearly one in five. For every five who are employed, you have nearly one who is unemployed, if you think of it like that. It is leaving out of the picture people in education and the economically inactive. People sometimes think that one in five 18- to 24-year-olds is unemployed. It is not that; it is one in five of the economically active. Those are their rates. If you take the numerical split in the unemployed — the 6% that I talked about — around 60% of those are 25-plus and about 40% are aged 18 to 24. That gives you a feel for the size of the problem. That is about 20,000-odd 18- to 24-year-olds.

The next slide provides a bit more information on the labour market status of 16- to 24-year-olds. It is showing that 42% of people aged 16 to 24 are in employment and 37% are in education. As the jobs market became much more difficult, there was a trend for people to switch from seeking employment or being in employment to education. That has kind of reverted to the situation where proportionately more young people are in employment than in education. There are still 10·8% or 10·3% who are either unemployed or economically inactive for another reason. That figure — those bottom two lines — really has not changed. That gives you a sense of perspective.
The next slide gives the claimant count by new district council area. This is switching to the jobseeker's allowance claimant count rate measure of unemployment. You can see that Derry and Strabane has 13% of 18- to 24-year-olds — and this is out of that population — who are in receipt of jobseeker's allowance, which is nearly twice the Northern Ireland average. That is the rank order there.

The final group of slides take us to those not in employment, education or training. That gives a Northern Ireland rate of 16% for those aged 16 to 24. That, again, is out of the whole 16- to 24-year-old population. That is higher than the UK rate of 12%. When we break that down across the countries of the UK, which is the next slide, you can see that Northern Ireland and Wales have similar rates of 16%, much higher than England, Scotland and the UK average.

I was going to stop there, just in case there are any questions.

The Chairperson (Mr Swann): Members, are there any additional questions?

Mr Flanagan: James, thanks for the presentation, but I think that the glaring omission is the rate of emigration, particularly from poor communities. So many young people, unable to access employment, have left to work elsewhere. Are there any figures available that you can include in future labour force briefings on how emigration is impacting on unemployment figures?

Dr Gillan: Yes, we have a slide at the back. It is an old slide. David, do you want to comment on it?

Dr David Marshall (Northern Ireland Statistics and Research Agency): I will say a few words about that. We had quite significant migration into Northern Ireland up to 2008, when we had population growth due to migration of up to 10,000 people per annum. After the economic downturn, as Mr Flanagan said, migration turned the other way and we had net out-migration from Northern Ireland. These figures go up to only 2012-13 and are in tabular form. We actually have 2013-14 additionally, but this shows net out-migration up to 2012-13. Effectively, we are finding that net out-migration started about 2010-11 and went through until 2012-13. We are finding that, as of 2013-14, it is turning ever so slightly back the other way.

Mr Flanagan: David, is that table two years out of date?

Dr Marshall: That goes up to 2013. There is actually another year, which is July 2013 to June 2014, that we do not have on this slide. We can furnish you with the full details. Those are the latest figures. The latest migration figures are for the year to the end of June 2014.

It also shows that there is more out-migration from places like Derry and Strabane because of economic circumstances, whereas, in places like mid-Ulster, Dungannon, the upturn has meant that in-migration has returned — if that makes any sense.

Mr Flanagan: When are the figures for 2014-15 due to be published?

Dr Marshall: The way we measure migration is that you have to be living here for a year or more, so it takes a year for the data to be collected. You cannot be a migrant for three months. You are still a resident of the country that you previously lived in. It takes a year for that to happen. The mid-year estimates for 2015 will be published in the middle of 2016.

The Chairperson (Mr Swann): You can supply us with that.

Dr Marshall: Absolutely. We will supply you with that table and the details when the next set of figures is published.

Mr Flanagan: Is there any indication of the impact on unemployment rates or whether the people who left were in employment, long-term unemployment or what their employment category was at the time of their departure?

Dr Marshall: We do not know the specific characteristics of the people who leave. We know that the vast majority — the figure is well over 50% — of people who come to live here come either for work or education purposes. The other reason why people come is that they are part of a family that is coming. Those are the main reasons for people coming, but it is hard to identify those people when they leave.

Mr Flanagan: Is there any way of measuring it?

Dr Marshall: We know that, in part, a lot of people who leave go to GB for education purposes. We can measure that, but it is hard to measure the main reason why other people want to leave.

Mr Flanagan: Could you not ask them? Would that be too easy?

Dr Marshall: There are 10,000 people —

Dr Gillan: You would have to ask them when they are there.

Dr Marshall: Millions of people flow through the airports.

Mr Flanagan: How do you know that they have gone?

Dr Marshall: We measure people as they are no longer on the health card register. We ask schools whether children have left. We count people through the National Insurance system to see whether they are no longer paying National Insurance.

Mr Flanagan: Do you not do any surveys at airports?

Dr Marshall: We do, but 4·5 million people flow through Northern Ireland airports each year. The number of migrants is vanishingly small. Most people are flowing for holiday purposes or business.

Ms Lo: If they are going to an airport, they could be going on holiday.

Ms McGahan: Thank you for your presentation. If 18-year-olds complete their A levels, decide to take a gap year and do not have employment, what category do they fall into?

Dr Gillan: If they are available for work, are in the reference period and are seeking work, they are counted as unemployed. If they are looking for a job while they are on their gap year, they are counted as unemployed. If they have a job, obviously they are employed. They tell us their main reason for not being economically active, and we put them into a category on that basis. The fact that they are on a gap year does not mean that they are treated any differently. Essentially, it is a break in education. They leave the education category and move into something else.

Ms McGahan: If, for whatever reason, 18-year-olds are not claiming jobseeker's allowance — I know of one such young person — what category do they fall into? Would it be "other"?

Dr Gillan: We have a slide that shows that overlap. There are two ways of measuring unemployment, one of which is the internationally agreed definition. That depends on whether you are available or seeking work and have been unable to find work. Some of those people may or may not be in receipt of jobseeker's allowance. The individual whom you know is not in receipt of jobseeker's allowance, but we still count such people as unemployed under the internationally agreed definition. That is the labour force survey way of doing it, so they are still picked up by the measure.

On this slide, the pink one on the left is the labour force survey measure of unemployment, and the blue one is the claimant count. The grey bit is where they overlap. You are in receipt of jobseeker's allowance, and, under the international definition, you are unemployed. There will be ones to the left in the pink — about 33% — who are not receiving any unemployment benefits, but we are still counting them as unemployed.

Mr F McCann: Another graph shows that the NI youth unemployment rate for those aged 18 to 24 is 18·7%. Is that a big dip? I thought that, at one stage a number of months ago, we were talking about 23% or 24% youth unemployment. I know that different graphs give different aspects of employment, but it seems a fairly substantial drop.

Dr Gillan: It was 23% from December 2013 to February 2014. You can see from that graph that the blue line jumps about a bit.

Mr F McCann: That is a huge downward jump.

Dr Gillan: It is difficult to say whether it is a real change or is just within the margin of error of the measurement of the graph. We will check it out.

Mr F McCann: I am not saying that it is done intentionally, but it could be misleading for the actual unemployment rate, especially for young people. We constantly ask whether there has been any change or improvement in unemployment levels for young people. We obviously take that as a barometer that things are starting to change for employment. Ten months ago, we were told that it was around 23%, and it is now down to 18·7%. That is a quare drop.

Dr Gillan: Yes. That is the best estimate that we have of the change. It is the way that those things work. Is it a real change, or is it just because of the way in which the survey bounces about? New people come in all the time, and it will change. We will report back to you whether that is a statistically significant change. I sometimes think that the bar is set very high for statistically significant changes. You are asking whether you are 95% confident that it is a real change. It may not meet that threshold, but that is our best estimate, which seems to suggest that it is coming down a bit.

Mr F McCann: I appreciate that; thanks.

Mr Anderson: Apologies for arriving late. In one graph on people not in education, employment or training (NEET), Northern Ireland is sitting at 16%, but, at one stage, we were dipping away down at about 9% or 10%. Can you explain that?

Dr Gillan: There was a drop around April 2010 to —

Mr Anderson: The percentage shown on the graph could be between 8% and 12%.

Dr Gillan: — the end of 2010.

Mr Anderson: Can you explain that? After April 2010, the percentage goes backwards and forwards, until it peaks at 16%.

Dr Gillan: That is about 2010.

Mr Anderson: Yes, it is between 2009 and 2010.

Dr Gillan: The employment situation was starting to improve, albeit not very markedly.

Mr Anderson: That graph stands out because the percentage is so much higher than the UK as a whole.

Dr Gillan: It looks like a big drop. If that is a drop over the quarter, it looks particularly big. Some of that could be down to measurement and statistical margins of error, and some of it could be down to real change. It is a relatively small group of people. Our estimate is about 34,000 at the minute, which might be based on a relatively small number of individuals being interviewed, so you can get those —

Mr Anderson: Does it not call into question the accuracy of the sample that you take at any one time?

Dr Gillan: I would not say that. For our tables, but not for this graph, we always publish the confidence intervals on any estimate. While we say that that point is the best estimate, we also say that we are confident that it is within that range. The user must be careful in interpreting it. We should not place too much weight on any one estimate. However, that looks like a trend coming down and then going back up.

Mr Anderson: It certainly does. It sticks out so clearly.

Dr Gillan: We are trying to address sample size in the labour force survey. We are pulling together a lot of our other social surveys annually to increase the sample size, which allows us more precision. We can break it down better geographically. As we build this up over time, we will get much better information about —

Mr Anderson: Do you take different sample sizes for a comparison of accuracy?

Dr Gillan: Yes, we can work that out.

Dr Marshall: We run the labour force survey, which is what we are talking about here, and it is about 2,500 households in Northern Ireland. We also run a health survey and a family resources survey about poverty. A small number of the questions on those surveys are similar. They are independent surveys of independent households. You can take the results of those and combine them, which tends to iron out some of the variation. The problem, of course, is that the labour force survey asks detailed questions about the labour market. Some of those questions are not on the other surveys, so you can only combine that information when it is asked in an equivalent way. I go back to Mr Ramsey's point: it will allow us, for example, to provide more information on youth unemployment by council area.

Mr Ramsey: Very good.

Dr Marshall: Those are the sorts of ideas, but it will not provide the panacea across the labour market area that we would like to be able to provide.

The Chairperson (Mr Swann): David and James, thank you very much for your time. You have papers with additional information, and, if you could forward those to us, we would, as always, appreciate it.