Young People in the Labour Market

Unemployment and inactivity in young people

In labour market statistics, an individual can belong to one of the following three states:

• Employed
• Unemployed (seeking work in the past 4 weeks and available to start work within 2 weeks, according to the International Labour Organisation definition)
• Inactive (not in employment, and not unemployed)

The inactive group is not engaged in the labour market and includes people who are in education, looking after family, retired, or sick/disabled.

Subgroups of the labour market, such as the population aged 16-24, can therefore be examined in terms of proportions who are employed, unemployed and inactive.

• The proportion of 16-24 year-olds in employment rose slightly from the mid to late 1990s, and then fell gradually after 2001, before falling more sharply after 2007
• The proportion who were unemployed declined after the post-recession peak in 1992-1993. It levelled out from 2001, and increased slightly between 2005 and 2007 before rising significantly since the 2008-09 recession
• The proportion who were inactive has risen over time, particularly since the 1990s, with a big jump in 2008. The latest figure, at 36.4 per cent in Q1 2011, is the highest on consistent records that began in 1992

Unemployed proportion versus unemployment rate

While the unemployed proportion gives the proportion of the whole population who are unemployed, the unemployment rate is the more commonly used measure of unemployment, giving a picture of the percentage of the available workforce who are unable to find work. In line with the method used internationally, the unemployment rate is calculated as:

Increases in the number who are inactive, for whatever reason, can impact on the unemployment rate as it can reduce the number employed, unemployed or both. If the number of unemployed is held constant, a fall in the number of employed will increase the unemployment rate.

For people aged 16-24, both the unemployment rate and unemployed proportion fell steadily after the peak in 1992-1993, before levelling out between 2001 and 2004. Both measures then increased slightly between 2005 and 2007 before rising sharply in 2008.

However, in 2008, the increase in the unemployment rate was greater than the increase in the unemployed proportion, resulting in a larger gap between the two measures than in the years previous to 2008. This can be explained by the way that during the 2008-09 recession, the rise in the proportion who were unemployed was coupled with a rise in the proportion who were inactive. This meant that there was a large drop in the proportion who were employed, leading to a sharp rise in the unemployment rate.

Increase in younger people who are inactive and in full-time education

The main driver for the increase in inactivity for younger people since 2004 has been their participation in full-time education. The percentage of 16-17 year-olds who were inactive and in full-time education hovered around 40 per cent in the early to mid 1990s. It dropped slightly between 1995 and 1997 but has been on the increase since 1997. It rose more sharply during the 2008-09 recession.

The percentage of 18-24 year-olds who were inactive and in full-time education has been increasing steadily since 1992.

Economic activity and inactivity of 16-17 year-olds

For 16 to 17 years olds:

• The proportion who were employed fell for a brief period after the early 1990s recession, before increasing to peak at 49.5 per cent in Q4 1997. It has been falling steadily since to reach a low of 23.3 per cent in Q4 2010
• The change in the proportion who were unemployed was small in comparison, increasing from a low of 9.6 per cent in Q4 1994 to a peak of 14.1 per cent in Q4 2010
• In contrast to the unemployed proportion, the unemployment rate hovered around 20 per cent throughout the 1990s. In the past decade, it has nearly doubled, from 18.8 per cent in Q1 2001 to 37.5 per cent in Q1 2011
• The proportion who were inactive fell slightly from 1995, before starting to rise in the late 1990s. Between 1998 and 2006, this increase was due to a rise in the percentage of inactive 16-17 year-olds both in and not in full-time education. From 1992 onwards, the inactive proportion was lowest at 39.2 per cent in Q4 1997, and highest at 62.6 per cent in Q4 2010

Economic activity and inactivity of 18-24 year-olds

For 18-24 year-olds:

• The proportion who were employed peaked at 68.0 per cent in Q2 2001. It gradually declined in the early and mid 2000s before falling more sharply during the 2008-2009 recession. It reached a low of 57.8 per cent in Q1 2010
• The proportion who were unemployed declined steadily after a peak in the early 1990s. It rose slightly between 2005 and 2007 before a larger increase in 2008. It was lowest at 7.4 per cent in Q4 2003. The peak after the 2008-2009 recession was 12.9 per cent in Q4 2010, this compared with the post-1990s recession peak of 13.9 per cent in Q1 1993
• The unemployment rate for 18-24 year-olds fell following the 1990s recession. It rose between 2005 and 2007 before rising more sharply during the recent recession. Post 2008-2009 recession, the unemployment rate peaked at 18.2 per cent in Q4 2010. This compared with the peak of 17.8 per cent in Q1 1993 following the 1990s recession.
• The proportion who were inactive has been increasing consistently since 1992. It was lowest at 22.0 per cent in Q1 1993 and reached a high of 29.7 per cent in the most recent quarter of Q1 2011

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Tel: Jamie Jenkins 01633 455840
E-mail: jamie.jenkins@ons.gov.uk