Although unemployment has fallen to its lowest level in almost a year due to the “Olympics effect”, the end of demand for temporary labour could see joblessness jump 0.3% by the close of the year.
According to data released by the Office for National Statistics, the UK’s unemployment rate stood at 8% for the three months to June, a drop of 0.2% on the previous quarter, which meant that 46,000 fewer people were out of work.
The number of economically inactive people also fell by 117,000 to 9.1 million, taking the total to 22.6%, down 0.3% on last quarter. Some 130,000 people found full-time work, taking the total here to 21.41 million, while 71,000 also took on part-time jobs, bringing the total there to a record high of 8.07 million.
But the number of people who had to sign up to part-time employment because they could not find full-time work also rose by 16,000 to a new record of 1.42 million.
Daniel Solomon, an economist at the Centre for Economics and Business Research, said that “labour market fragility” was likely to be exposed by the ending of the Olympic and Paralympic Games, which had provided a large one-off boost to employment in London, a figure that the organisers had put at more than 100,000 people.
The problem was that the bulk of these jobs were filled by comparatively young and low-skilled workers who would find it “difficult to compete in a crowded labour market where youth unemployment is already running at 21.5%”, he added.
“Ultimately, if at the end of the Paralympics, 100,000 people become newly unemployed, this could push up the unemployment rate by 0.3 percentage points,” Solomon warned.
Kevin Green, chief executive of the Recruitment and Employment Confederation, was equally cautious, pointing out that the UK labour market’s apparent defying of gravity “could be the lull before the storm”.
“With continuing uncertainty from the Eurozone and with thousands of new graduates and school leavers joining the labour market over the summer, it’s difficult to see how this upward trend can be sustained,” Green said. “Our data suggests that we’re likely to experience a zigzag recovery, with jobs figures getting worse before they get better again.”
