Events | 2009.06.18
Unemployment rises by another 230,000
• Number out of work reaches 2.261 million – or 7.2%
• Labour \'sleepwalking through crisis\', Tories say
• But claimant count smaller than analysts expected
Unemployment has soared to its highest level in more than 12 years as UK companies continue to fold or slash headcount in the face of Britain\'s deepest recession in almost 30 years .
The total number of people out of work rose by 232,000 in the three months to April, to 2.261 million, data from the Office for National Statistics showed. This pushed the unemployment rate to 7.2% – the highest since July 1997.
The ONS said another 39,300 people joined the claimant count in May, taking the number claiming jobseeker\'s allowance to 1.554 million. This was fewer than forecast by City economists, who had expected a rise of 60,000.
Today\'s labour force survey also showed that the number of people in employment fell by 271,000 between February and April – the biggest three-month fall on record. Shadow work and pensions secretary Theresa May said this was "another grim milestone" in the recession.
"The sad reality is that the government is continuing to sleepwalk through this unemployment crisis," May claimed.
Liberal Democrat work and pensions spokesman Steve Webb said that "Labour\'s pledge to end high unemployment is in tatters" and warned that many people have now been unemployed for over a year.
But business secretary Lord Mandelson said he welcomed the news that the rate of rising unemployment was slowing.
"It\'s an encouraging signal but there is at the same time too much unemployment and any difficulty people have in finding jobs requires the government to continue taking the action that we are in delivering real help in the job search and training for people who are affected," he said.
"No green shoots"
Some analysts were also encouraged by today\'s smaller-than-expected rise in the monthly claimant count. Ross Walker, economist at RBS Financial Markets, said the figures were "moderately encouraging" and Amit Kara of UBS said they showed that employees were clinging on to their jobs by accepting lower wages.
But Alan Tomlinson, partner at UK insolvency practitioners Tomlinsons, said any talk of green shoots was "still grossly out of sync" with the situation in the workplace.
"From where I\'m standing things are as bad now as they were a few months ago," Tomlinson said. "The small and medium-sized companies that we deal with each day are still being decimated by sharp drops in turnover, growing debts and, critically, the ongoing failure of the banks to lend."
TUC general secretary Brendan Barber warned that it will take years for the unemployment figures to fall significantly.
"Economists may argue about whether we are now out of recession and into recovery, but in the real world of Britain\'s workplaces people are still losing their jobs and finding it harder and harder to get new ones," he said.
Protest over youth unemployment
The figures add to growing concern that many of the 600,000 young people who leave school, college or university this summer will not find a job – nearly half of UK companies say they are not planning to hire new starters . A group called Youth Fight for Jobs held a protest today outside the Department for Business, Innovation and Skills to demand more government support.
"We have to fight to prevent an entire generation being written off," said Sean Figg, national organiser for Youth Fight for Jobs .
"Unless the issue of youth unemployment is tackled seriously we are storing up a raft of social problems for decades to come," added Figg, citing the warning from David Blanchflower, the dovish former MPC member, that being unemployed in youth creates "permanent scars" .
Howard Archer, chief UK and European economist at IHS Global Insight, predicted that the economy will continue to shed jobs "well into 2010". He believes that unemployment is likely to peak around 3 million, rather than reach 3.3 million he previously feared.
Archer also pointed out that today\'s "horrible" labour force figures include the surge of unemployment seen in February, when the claimant count leapt by a record 138,400 .
The prospect of 3 million unemployed has dampened hopes of a swift economic recovery. The chief executives of Home Retail, Halfords, New Look and Kingfisher have all cited it as a threat .
Lindsay Hoyle, Labour MP for Chorley, warned that unemployment is hitting all parts of the economy.
"There is a real danger that we could see the withering away of our manufacturing base and a lost generation of potential as a result of the downturn," Hoyle said.
For more information, please visit
http://www.guardian.co.uk/business/2009/jun/17/uk-unemployment-rises
