UK unemployment levels have hit a “truly horrific” 17-year high, confirming that the private sector has failed to create enough jobs to offset swingeing public sector cuts.
The International Labour Organization-defined rate of worklessness in the country now stands at 8.1% for the three months to August, up 0.4% on the quarter. The 114,000 increase in the total number of people out of work means that unemployment is currently at 2.57 million – the highest rate since October 1994.
In a further sign of weakening labour market conditions, the claimant count likewise rose by 17,500 between August and September.
But the situation is particularly bad among young people. Here unemployment rates grew by 1.6%, meaning that 21.3% of all economically active 16 to 24 year olds are now out of work – the highest rate since comparable records began in 1992.
John Philpott, chief economic advisor at the Chartered Institute of Personnel and Development, said: “These labour market figures are truly horrific, with the economy shedding almost 15,000 jobs each week between June and August. The quarterly rise in unemployment is reminiscent of an economy in recession rather than any kind of recovery and confirms that the private sector just isn’t creating enough jobs at present to offset public sector job cuts.”
With 5.6 unemployed people chasing every vacancy, the labour market was back to where it was in the depths of recession in 2009 and the underlying problems were worsening given that a third of unemployed people had been out of work for more than a year, he added.
“Many more months like this and we’re likely to see the re-emergence of the kind of ‘Gissa Job’ economy that scarred Britain in the 1980s and 1990s,” Philpott said.
The Centre for Economics and Business Research was similarly downbeat. Scott Corfe, the organisation’s senior economist, said in a statement: “The Coalition Government clearly faces a colossal challenge in getting Britain back to work and restoring living standards, with increasing pressure from the public and the media to consider a slowdown in the pace of spending cuts.”
But despite the weak labour market, he did not expect it to change course any time soon due to political reasons.
“David Cameron, George Osborne and Nick Clegg all reaffirmed their commitment to ‘Plan A’ during party conference season and a U-turn on fiscal austerity would now prove politically embarrassing. Although the economic picture has changed and historically low bond yields may justify some fiscal loosening, political pride has bound the hands of policymakers,” Corfe said.
