Published: 12 Oct 2011
Last Updated: 06 Nov 2012
Young people are, once again, the ones hit hardest by unemployment numbers, published by the Office for National Statistics this morning. After several hopeful months where the number crept lower, unemployment in the three months to August rocketed to 2.57m – its highest level in 17 years. And just over a third of that is made up by 16-24-year-olds. Granted, much of that will be due to the delayed effect of public sector cuts – but is this proof that the private sector hasn’t reacted in quite the way that the Coalition had hoped?
The figures are riddled with superlatives: the number of people in employment dropped by 178,000 in the three months to August, its biggest fall in more than two years. The number of unemployed 16-24-year-olds increased by 74,000 to 991,000 – its highest since records began in 1992 (though not quite the 1m some had been anticipating). With 175,000 losing their jobs, it was also the largest drop in the number of people with part-time jobs since 1992 – which is particularly bad news, considering that figure had been climbing steadily during the last couple of years. And even those earning money are feeling the squeeze: the average pay rise was just 2.8% in the year to August – that’s 0.1% less than the same figure for the month before.
All in all, to quote Scotia Capital economist Alan Clarke, a bit of a ‘disaster’. And the bad news is that, as Clarke pointed out, ‘the economy is growing at half the pace it needs to keep employment stable. It’s not going to change any time soon, so we should get used to numbers like this.’ Indeed: just yesterday, the British Chambers of commerce cut its UK growth forecast for the third time this year, from the original 1.9%, to just 1.1%, adding that rather than investing in growth, businesses are beginning to rein in their spending, hoarding cash in anticipation of another downturn. Which, given the Government had been counting on the private sector to grow enough to absorb job losses in the public sector, is far from encouraging.
So were critics right – have the Government’s austerity measures been so austere, they’ve stifled growth? Yes and no: while there’s the external influence of the eurozone debt crisis to blame for business’ cautious behaviour at the moment, the Bank of England’s decision to introduce further quantitative easing suggests that it thinks the Coalition hasn’t done enough to create growth. The trouble is, though, that while another £75bn may be just the shot in the arm the economy needs, it’ll be some time before it begins to have an impact. During which time, another 74,000 16-24-year-olds could find themselves looking for a job…
The figures are riddled with superlatives: the number of people in employment dropped by 178,000 in the three months to August, its biggest fall in more than two years. The number of unemployed 16-24-year-olds increased by 74,000 to 991,000 – its highest since records began in 1992 (though not quite the 1m some had been anticipating). With 175,000 losing their jobs, it was also the largest drop in the number of people with part-time jobs since 1992 – which is particularly bad news, considering that figure had been climbing steadily during the last couple of years. And even those earning money are feeling the squeeze: the average pay rise was just 2.8% in the year to August – that’s 0.1% less than the same figure for the month before.
All in all, to quote Scotia Capital economist Alan Clarke, a bit of a ‘disaster’. And the bad news is that, as Clarke pointed out, ‘the economy is growing at half the pace it needs to keep employment stable. It’s not going to change any time soon, so we should get used to numbers like this.’ Indeed: just yesterday, the British Chambers of commerce cut its UK growth forecast for the third time this year, from the original 1.9%, to just 1.1%, adding that rather than investing in growth, businesses are beginning to rein in their spending, hoarding cash in anticipation of another downturn. Which, given the Government had been counting on the private sector to grow enough to absorb job losses in the public sector, is far from encouraging.
So were critics right – have the Government’s austerity measures been so austere, they’ve stifled growth? Yes and no: while there’s the external influence of the eurozone debt crisis to blame for business’ cautious behaviour at the moment, the Bank of England’s decision to introduce further quantitative easing suggests that it thinks the Coalition hasn’t done enough to create growth. The trouble is, though, that while another £75bn may be just the shot in the arm the economy needs, it’ll be some time before it begins to have an impact. During which time, another 74,000 16-24-year-olds could find themselves looking for a job…
