Unemployment jumps to 17-year high of 2.53m

The jobless count hits its highest level since 1994. Can George Osborne pull a rabbit out of his red box on Budget day?

by James Taylor
Last Updated: 19 Aug 2013
More bad news for the Government on the labour market: the Office for National Statistics says unemployment jumped by 27,000 to 2.53m in the three months to January. Obviously the bad weather during the period will have had some impact. And on the plus side, the Jobseekers' Allowance claimant count also fell. But the big fall in public sector employment - and the ongoing decline in youth employment - are a reminder of just how big a challenge the Government faces. George Osborne's Budget next week will supposedly focus on growth; clearly it can't come a moment too soon...

The latest jobless count means 8% of the workforce are now out of a job, the highest figure since 1996 - back when TV's Professor Brian Cox was just a keyboard player in a rubbish band. For 18-24 year-olds, the figure is an alarming 18.3%, a record high (although some argue this is actually a misleading statistic). And 45,000 jobs were shed in the public sector, around half of which were in local government. Since the Government's cuts haven't properly kicked in yet, there are clearly plenty more where that came from.

So are there any silver linings to this big black cloud? Well, the fall in the claimant count is good news for the public finances. The figures also suggest an increase in the number of people in work: up 32,000 to 29.16m. This includes a pick-up in private sector employment; a trend the Government clearly hopes will continue. So it doesn't look like the labour market is imploding completely, contrary to some doom-mongers' predictions.

Equally, while wages have risen - by 2.3% compared to this time last year - that's not the kind of earnings growth that will push the Bank of England into an interest rate rise (it being well below inflation). Especially since much of this growth came from City bonuses. (Speaking of which, recruiter Morgan McKinley reckons the number of bankers on the lookout for new jobs after receiving disappointing bonuses is up, but vacancy numbers are down. Your heart bleeds, doesn't it?)

Still, there’s clearly a need for some creative growth policies from the Government, to go with their austerity measures. So George Osborne has a lot to do between now and next Wednesday.

One interesting point to note, though: the number of new vacancies was in positive territory, up 24,000 - though this was only because of the 29,000 temporary roles created to look after the census. Who says the Government doesn't know how to boost job creation?

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