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The real level of unemployment 2012

In the wake of recession, unemployment has re-surfaced as a major political issue in the UK. There is a consensus that unemployment is far too high; the disagreements are about the most effective ways to bring the numbers down.

But just how much unemployment is there?

In the UK there are two official measures of unemployment – the claimant count and the Labour Force Survey measure. In mid-2012 these point to divergent figures – 1.6m and 2.5m respectively. And neither of these figures is comprehensive. The problem is that in the UK there are well-developed mechanisms that divert the unemployed between different parts of the benefits system, notably from unemployment benefits to incapacity benefits, or out of the benefits system entirely. Some of these men and women are counted in the official unemployment figures, but others are completely missed.

The shortcomings of official unemployment statistics are most acute at the local level, for example in the figures for individual local authorities. The claimant count data available at this scale is plentiful, but the claimant count is the very narrowest measure of unemployment, missing huge numbers just about everywhere. The Labour Force Survey doesn’t help much either because, being based on a survey with small sample sizes in many places, the figures for local areas are subject to a wide margin of error and can be erratic from year to year. The consequence is that no official figures offer a reliable guide to unemployment levels in different parts of the country.

This report assesses the real level of unemployment in 2012. It plugs the key gap in official measures of unemployment and provides alternative – and more robust – estimates of unemployment across all Britain’s regions and districts.