Fall in unemployment figures receives cautious welcome from employers’ groups

Employers’ groups have cautiously welcomed today’s announcement of a surprise fall in unemployment figures, but warned that the statistics mask some “worrying trends”.

The official statistics for the three months to January show that unemployment fell by 33,000 to reach 2.45 million, or 7.8% of the working-age population. But the figures also show that there 54,000 fewer people in work, with full-time jobs particularly hard hit.

John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said: “One word sums up the latest official jobs figures: confusing. The apparent paradox is explained by a very sharp rise of 149,000 in the number of economically inactive people, with the number of students surging by 98,000. Jobless young people are thus turning to study in their thousands to avoid the dole.”

Although Philpott admitted that a fall in unemployment is “clearly better than a rise”, he warned this should not be read as a sign that the UK jobs market is recovering strongly.

“Overall, the jobs market is flat, operating at much weaker level of demand than before the recession, and still at risk of a serious relapse,” he said. “The jobs market for the time being is still being propped up by the public sector, but the public sector job creation machine is about the be switched off.”

Whoever forms the next government will face “a Herculean task” in its efforts to return the UK economy to full employment within this decade, Philpott added.

David Kern, chief economist at the British Chambers of Commerce, said the better-than-expected figures “strongly reflect the sacrifices made by businesses and workers in restraining pay” but he warned that they “continue to hide worrying trends”.

“The number of people in employment has fallen dramatically, with a significant decline among those in full-time work. The number of people working part-time, because they could not find a full-time job, has risen,” Kern said. “More worryingly, the number of inactive people – those leaving the workforce – has risen to a record high. If some of these people decide to look for work, unemployment could rise sharply.”

While it is encouraging that unemployment has fallen sharply this month, the underlying growth in vacancies may be levelling off, warned John Atkinson, associate director of the Institute for Employment Studies.

“As a result, it remains the case that positive changes in one month are likely to be overturned in the next, and it is difficult to escape the conclusion that unemployment is likely to remain high without more sustained and substantial economic growth,” he said.

TUC general secretary Brendan Barber said the fall in the number of people out of work for between six and 12 months gives hope that long-term unemployment is not going to be as bad as previous recessions.

“Government and Bank of England stimulus have clearly helped to keep unemployment down,” he added. “But with millions still ‘under-employed’ and future economic growth far from guaranteed, it would be a desperate blow to UK families to throw all this away on a programme of unnecessary early spending cuts.”

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