Unemployment reaches highest total for 17 years

Unemployment across the UK has risen to its highest level for 17 years and now stands at 8%, according to figures released today by the Office for National Statistics (ONS).

The figures, which cover the three months to the end of January, point to a jobless total of 2.53 million, a rise of 27,000. The ONS also points out that youth unemployment has seen a further rise, to 18.3%.

However, the figures also show that the number of people claiming Jobseeker’s Allowance fell by 10,200, to 1.45 million.

The ONS also found that the number of people in employment aged 65 and over increased by 56,000 on the quarter to reach 900,000, the highest figure since records began in 1992.

John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), said: “The mixed picture of the UK labour market conveyed in the latest official figures offers room for both optimism and pessimism. The headline rise in unemployment suggests that the labour market weakened at the turn of the year, well before the impact of the coalition Government’s spending cuts and tax rises start to take full effect. However, figures showing more people in work in the private sector, including in manufacturing, and fewer on welfare benefits offer hope that the labour market might withstand the economic headwinds better than previously expected.”

Ian Brinkley, director of socio-economic programmes at The Work Foundation, expressed concern at the levels of youth unemployment highlighted by the ONS: “The labour market remains weak; modest employment growth has been matched by increasing unemployment and economic inactivity comparing the three months to January with the previous three months. Meanwhile, the rise in unemployment has been largely felt by the young, increasing numbers of whom are becoming long-term unemployed – a clear warning of big problems to come.”

Brinkley’s views were echoed by Kevin Green, chief executive of the Recruitment and Employment Confederation, who said: “There have been positive signs of improving employer confidence and increased hiring activity in many sectors. However, today’s figures confirm that the private sector is some way off being able to absorb public sector job cuts.

“The number of young people not in work or education still remains the real scandal and the Government needs to make this a top priority and better harness the contribution of employers through apprenticeships, internships and other initiatives,” he added.

However, Philpott was keen to point out that the methods used to calculate youth unemployment were skewing the figures, saying: “The CIPD repeats its call from earlier in the week for commentators to acknowledge the distorting effects of 16- to 24-year-olds in further and higher education on the headline rate and level of youth unemployment. One in eight young people in this age group are unemployed and almost 30% of those classified as unemployed are full-time students. The UK is experiencing a serious youth unemployment problem which requires an appropriate policy response but talk of a ‘lost generation’ of jobless young people does not aid sensible debate over possible solutions.”

The earnings annual growth rate for total pay (including bonuses) was 2.3% for the three months to January 2011, up from 1.8% for the three months to December 2010. According to the ONS, this was mainly driven by bonus payments in the finance and business services sector.

For more discussion on the ONS figures, see XpertHR’s blog on today’s findings.

XpertHR has further pay and benefits information, including data by sector.

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