'Real level' of unemployment still far higher than official figures

The report, by researchers at Sheffield Hallam University, finds that since 1997 real levels of unemployment have dropped by only 600,000, compared to a fall of 900,000 on the official ‘claimant count’ measure. Furthermore, the study reveals that most of this decrease was achieved between 1997 and 2002.

The report, The Real Level of Unemployment 2007, comes out on the same day that the government’s monthly unemployment figures are expected to show that the number of people out of work and claiming unemployment benefits remains below one million.

However, the report is not all bad reading for Gordon Brown. It finds that the biggest reductions in ‘real unemployment’ have occurred among men in Labour’s older industrial heartlands – the group for whom unemployment was often highest during the Conservative years.

The difference between the official figures and the Sheffield Hallam estimates is explained by the large number of people who have been diverted onto other benefits or out of the benefits system altogether. In particular, an estimated one million of the 2.7 million on incapacity benefits should be regarded as ‘hidden unemployed’, the report explains.

Professor Steve Fothergill, who led the study at Sheffield Hallam University explains, “This does not mean that one million incapacity claims are fraudulent, but these men and women would almost certainly have been in work in a genuinely fully employed economy.”

The report provides alternative estimates of unemployment for every district in Britain.

The figures show that hidden unemployment is particularly concentrated in the older industrial areas of the North, Scotland and Wales. The estimated real rate of unemployment is well above ten per cent in a number of cities, including Liverpool, Glasgow and Middlesbrough, and in several former coal mining areas. In contrast, the report confirms that much of the South of England outside London is at, or close to, full employment.

Today’s unemployment report is the third by the Sheffield Hallam University team – similar estimates were published in 1997 and 2002.

Professor Fothergill comments, “The large fall in claimant unemployment, coupled with the relative invisibility of unemployment on incapacity benefits or off benefits altogether, has created the misleading impression that the unemployment problem is fading away.

“Though levels of joblessness are clearly down on a decade ago and there has been no return to the sky-high unemployment of the 1980s and early 1990s, the in-coming Prime Minister needs to be aware that many parts of the North, Scotland and Wales still have a long way to go to match the employment levels found in the booming South of England”