The jobless total jumped 140,000 to 1.82m in the three months to September, the Office for National Statistics said this morning. That’s the highest total since Labour came to power in 1997, and it takes the overall rate of unemployment to 5.8%. The way things are going, it’s not impossible that the unemployment figure could hit 2m by Christmas…
Whichever way you look at today’s figures, they make pretty grim reading. The three-month figures show a big fall in employment (with manufacturing particularly hard-hit), plus a slowdown in earnings growth. What’s more, all the signs suggest that things have got even worse since: October apparently saw a 36,500 rise in the number of Jobseeker’s Allowance claimants. That's not quite as bad as economists expected, but it's still the biggest jump for 16 years, and the ninth consecutive monthly increase.
But if October was bad, it looks like November could be even worse. This week alone, corporate behemoths like Virgin Media, Taylor Wimpey, GlaxoSmithKline and Yell have all announced swingeing job cuts, while Vodafone refused to rule out the possibility yesterday as it announced a £1bn cost-cutting programme. Others will surely follow; employment is always a lagging indicator, so it’s bound to take some time before companies bite the bullet and start making people redundant.
So how much worse will things get? Economists seem to have different opinions about this, although all seem to agree that the answer is: ‘a lot’. ‘The last recession in the early 1990s saw 31 consecutive monthly rises in unemployment, so we are likely to have plenty more bad news on the labour market to come,’ says ING’s James Knightley, who’s expecting the claimant count to hit 2.5m by 2010. Other analysts think that’s optimistic, suggesting that the figure is more likely to top 3m.
One consequence of this will be that the government ends up shelling out much more money on benefits, at a time when it desperately wants to splash the cash elsewhere. So today’s news increases the pressure on Gordon Brown to pull a rabbit out of the hat at the Pre-Budget Report – particularly given that the true unemployment picture (if you count in all out-of-work benefit claimants) is much worse than this headline figure. For years the growth of the public sector and the influx of skilled migrants (who will presumably go home if the jobs dry up) has been propping up the labour market – is it now too late for the government to stop the rot?
In today's bulletin:
Sainsbury profits from rivals' misfortunes
Jobless total hits 11-year high
Christmas isn't cancelled after all
Tory boost as SMEs blast the government
MT's Little Ray of Sunshine: Sloping off for the winter