Rise in unemployment casts doubt on recovery
Hopes that the labour market was on the upturn are hit by latest figures.
Figures released this week have revealed that the number of people claiming unemployment benefit has hit its highest level since 1997. After two successive months of falling claims, it was widely hoped that the labour market was on on the upturn following the recession. These figures are a blow to that claim, and the increase in claimants is the largest since last July. The total number of claimants in the UK is now 1.64 million, the highest number since Labour came into power.
However, unemployment on the wider Labour Force Survey measure, which also includes people who are out of work but not claiming benefits, fell by 3,000 in the three months to December to 2.46 million, taking the jobless rate to 7.8%. John Philpott, chief economist at the Chartered Institute of Personnel and Development (CIPD), said that the fall was “minuscule” and explained the fall by saying that more young people were continuing their studies rather than going on the dole.
More worryingly, The Office for National Statistics (ONS) said there had also been a renewed increase in the number of people who are “economically inactive”, which includes those who are no longer searching for work as well as the unemployed. There is now a total of 8 million economically inactive people of working age – the highest number recorded since records began. There is a growing concern that the recovery from recession will come without the number of job vacancies created increasing – this could potentially create a massive financial divide among those in work and those out of work.
Finally, the latest ONS figures show that 2.8 million people are officially underemployed – defined as working fewer hours than they want to – between July and September 2009, which equates to nearly 10% of those in employment. This number has gone up by 700,000 from a year earlier, highlighting a worrying trend.