Business

UK unemployment total increases to 2.5m

  • 15 December 2010
  • From the section Business

Unemployment in the UK increased by 35,000 in the three months to October to 2.5 million, the Office for National Statistics (ONS) has said.

It is the first time that the jobless measure has risen for six months.

The surprise increase was driven by public sector job losses, and pushed the unemployment rate up to 7.9%.

However, the number of people claiming Jobseeker's Allowance in November fell fractionally, by 1,200 to 1.46 million, the ONS said.

At Prime Minister's Questions in parliament, Labour leader Ed Miliband claimed that in light of the latest jobs data, the government's claim that the UK economy was out of the danger zone "rings hollow".

David Cameron pointed to the fall in unemployment benefit claimants and a rise in job vacancies, and claimed that the coalition was about to launch the "biggest back-to-work programme for 70 years".

Public vs private

The rise in the number of jobless was almost entirely driven by the public sector, where employment fell 33,000, according to the ONS's latest monthly labour market report.

However, the private sector failed to take up the additional slack, with employment remaining unchanged.

The government is relying on private sector job creation to offset an estimated 330,000 public sector redundancies over the next four years due to government austerity measures.

But David Birne, insolvency practitioner at accountants HW Fisher, describes this view as being out of touch with what is happening on the ground.

"For the UK's businesses and their employees, 2011 is shaping up to be harsher than any of the past three years," said Mr Birne.

"This time next year we expect unemployment to be considerably higher than it is at present, as many more of Britain's companies go to the wall. We deal with companies of every size and from every sector day in, day out and for a large chunk of them things are looking very bleak indeed."

But the government was keen to defend the need for austerity to stabilise public finances.

"It's a long road towards restoring sustainable economic strength in this country," Employment Minister Chris Grayling told the BBC.

"You only get the private sector creating jobs if they have confidence in the direction of the economy, and they have confidence that the country will be stable economically."

Disappointment

The data could also heighten the policy dilemma for the Bank of England, coming only a day after figures showed consumer price inflation had risen to 3.3%, well above the Bank's 2% target.

In recent meetings, the Bank's monetary policy committee has been split three ways, with one member voting in favour of gradual interest rate rises to head off inflation, while another has voted to increase the Bank's purchases of government bonds in order to boost the recovery.

The unemployment figures do not bode well for 2011, according to Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD).

He found it especially disappointing that the positive momentum built up over the summer appears to have run out of steam before the full impact of government austerity has been felt.

While noting another slight fall in the number of people claiming Jobseeker's Allowance and a tiny increase in job vacancies, he said "the remainder of the ONS statistical release reads as if it was scripted by the Grinch who stole Christmas".

Part-timers

Pay - excluding bonuses - was up 2.2% on a year earlier, some way below the inflation rate, meaning that the purchasing power of wages continued to fall on average.

Another source of concern for many analysts is the growing inability of workers to find full-time jobs:

  • the number of people employed full-time fell 58,000, offset by a 26,000 increase in part-time workers
  • a record 1.16 million workers said they were working part-time because they could not find enough work
  • the number of temporary workers who could not find permanent jobs also hit a new high of 592,000
  • there was also a 22,000 increase in the number of people of employment age not seeking work - meaning they are not counted as unemployed - mainly due to an increase in early retirement.

"Until full-time jobs start to increase again the labour market will not be able to absorb large-scale job losses in the public sector," said Ian Brinkley, associate director of the Work Foundation. "Unemployment in 2011 must then inevitably rise."

Gender divide

Across the UK, among the worst-hit areas were Yorkshire, the North East and Northern Ireland, all of which already suffer unemployment rates over 9%, and saw big drops in total employment.

The Midlands saw the biggest jump in unemployment, up by 0.5 percentage points in the West Midlands and 0.8 in the East, to 8.9% and 8.2% respectively. Unemployment in Wales rose slightly, by 4,000.

London, the East and Scotland saw their unemployment rates fall slightly, while the South West remains the UK's jobs outperformer, seeing its unemployment rate fall 0.3 percentage points to just 5.7%, the lowest in the UK.

The data suggests that women are doing worse than men. The number of female benefit claimants rose by 4,800, compared with a 6,000 drop in male claimants.

The percentage of women aged 16 to 64 in work dropped 0.2% to 65.5%, while for men the rate was unchanged at 75.8%.

Related Internet links

The BBC is not responsible for the content of external Internet sites