Employers’ groups fear ‘twin peaks’ jobs recession

Employers’ groups have given a lukewarm reception to the latest round of employment figures and fear that the UK will experience a “twin peaks” jobs recession with more people out of work the second time round.

Both the Chartered Institute of Personnel and Development (CIPD) and The Work Foundation expect unemployment to rise later this year when the full impact of government cuts takes effect.

Figures published today by the Office for National Statistics for the three months to August 2010 reveal that the number of unemployed people fell by 20,000 to 2.45 million.

This means the overall UK unemployment rate fell by 0.1 percentage points on the previous quarter to 7.7%.

Yet the number of people claiming jobseeker’s allowance rose by 5,300 between August and September to reach 1.47 million – the second consecutive monthly increase in the number of claimants. Meanwhile, the number of vacancies was 459,000 – down 30,000 over the quarter.

The findings have sparked fears that unemployment figures will spike again towards the end of the year.

Dr John Philpott, the CIPD’s chief economic adviser, pointed out that while headline unemployment rates appear to have settled at a post-recession peak of just under 2.5 million in recent months, the deterioration in demand for labour signalled by the ongoing rise in claimant unemployment and the drop in job vacancies suggests that the jobless total will soon start to rise again.

“It looks as though the UK will experience a ‘twin peaks’ jobs recession with the second peak higher than the first – closer to 2.9 million than 2.5 million,” he said. “Indeed, this twin peaks effect is already emerging in the youth labour market which is showing signs of deterioration, with a renewed increase in the number of jobless 18- to 24-year-olds.”

Ian Brinkley, associate director of The Work Foundation, said: “With economic growth slowing and the full impact of public sector spending cuts still to come, there is a real danger that the job recovery will come to a halt and unemployment start to rise again.”

However, employment minister Chris Grayling described the rise in employment as a “step in the right direction”. “From early next year our work programme will come into force to ensure that long-term unemployed people and others who need it have tailored support to move them into sustained work,” he added.

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