UK unemployment rises to 2.5 million

After months of falling unemployment, a mysterious phenomenon given the state of the economy, the jobless count has begun to rise once more.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

The ONS has unveiled an interesting smorgasbord of labour market statistics this morning. The good news is that private sector employment is still rising, up by 151,000 over the last three months. The bad news is that these are mostly low-paid positions that are hampering overall wage growth. And that these gains in private sector employment have been offset by a 20,000 fall in public sector headcount, as austerity-driven spending cuts continued to lead to job losses.

As a result, public sector employment has fallen to its lowest rate since late-2001, while private sector employment is at an all-time high. Good news of a sort, as it is evidence of a re-balancing of the economy away from the public sector.

To muddy the waters even further, employment may be rising but, due to the growing size of the workforce, so is unemployment. The jobless count increased by 7,000 to 2.52 million between November and January but the unemployment rate has held fast at 7.8%. Those in work are staying in their jobs, albeit working fewer hours as shifts dry up due to the economic downturn.

However, at least the public purse has been relatively unaffected by the rising number of unemployed. The number of people claiming Jobseeker's Allowance in February actually fell by 1,500 to 1.54 million, the lowest level since June 2011.

This must be music to the Treasury’s ears. But no such luck for the people actually in employment: pay growth is continuing to weaken. While workers' average earnings rose 1.2% over the three months (compared to last year), inflation is running at 2.8%, so pay packets are effectively shrinking.

Young unemployment is also at worryingly high levels. The number of young people aged 16-24 without a job has risen to 993,000 over the three months, taking the youth unemployment rate to 21.2%.

This mixed bag of labour market statistics is evidence of a struggling economy, and a nation that is getting poorer by the day. Chancellor George Osborne will be needing his tin hat in the despatches box this afternoon…

Join our LIVE Budget 2013 webchat today to find out Osborne's plan for the economic future of the UK.

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