Unemployment: Record high economically inactive must be prioritised by incoming coalition government

The incoming coalition government must make reducing unemployment and creating jobs a priority after the latest job statistics revealed a record number of economically inactive people and a further increase to the jobless total, employers’ groups have warned.

The number of people of working age who do not have a job has increased by 88,000 over the three months to March to reach a record high of 8.17 million, the Office for National Statistics (ONS) confirmed today.

Almost half of this quarterly increase in inactivity was due to the number of students not in the labour market, which increased by 43,000 on the quarter to reach 2.3 million. Those looking after a family or staying at home instead of working rose by 25,000 to 2.25 million over the same period.

The unemployment rate for the quarter was 8% – no change on the three months to February – with the total number of jobless rising by 53,000 during the same period to 2.51 million, the highest figure since 1994.

The number of long-term unemployed people also increased by 94,000 over the quarter to reach 757,000, the highest figures since the three months to May 1997. Youth unemployment rose to 941,000, up from 923,000.

The Chartered Institute of Personnel and Development said the record number of economically inactive people sent out a “clear SOS message” to the incoming coalition government.

“If David Cameron’s incoming coalition government wanted reminding about the economic policy challenge that lies ahead, Conservative and Liberal Democrat ministers need look no further than today’s dire official jobs figures,” John Philpott, chief economic adviser, warned.

“Higher unemployment, including more unemployed young people, fewer people in work – especially full-time work – an increase in redundancies, a fall in job vacancies, and especially a record number of economically inactive people, sends out a clear SOS message on the state of the UK labour market,” he said.

“How to combine the critically important task of cutting the fiscal deficit with meeting the equally important challenge of restoring full employment will provide Cameron and his coalition partners with their sternest test. The rhetoric of ‘getting Britain working again’ is about to meet reality.”

The Recruitment and Employment Confederation (REC) also called on the new Tory-Lib Dem government to focus on helping more people back to work.

Kevin Green, chief executive, said: “The latest unemployment figures are one of the first indicators that the new government has on the state of the economy and the fragility of the jobs market. Reducing unemployment and creating jobs should be the central priority of this new administration. Our flexible jobs market has already ensured that unemployment has not reached the levels seen in other European countries and will play a major role in helping people back into work.”

The REC will be writing to ministers in the new coalition government on three regulations which it believes could threaten job recovery, including the Agency Workers Regulations, which the Tories have said they would repeal if they came to power.

New pensions rights and the operation of the Vetting and Barring scheme could also threaten jobs, the body warned.

“There are a number of regulatory measures brought in by the last government which threaten our flexible labour market. We call on the new government to reconsider these urgently,” Green said.

However, he warned that any upturn in job opportunities in the private sector could easily be “counter-balanced” by cuts in the public sector.

“Reducing the deficit is the other immediate priority, but the government must focus on reforming public services rather than short-term cuts. We need a well-executed programme of productivity improvement and innovation in the delivery of critical public services,” he said.

Meanwhile, the ONS stats revealed the claimant count in April 2010 was 1.52 million, down 27,100 on the previous month, but up 11,300 on a year earlier. The claimant count rate was 4.7%, down 0.1 percentage point on the previous month, but virtually unchanged from a year earlier.

In the three months to March 2010, total pay in the private sector rose by 3.6% on a year earlier. During the same period, total pay in the public sector rose by 4.4% on a year earlier.

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