Comment on ONS Unemployment Statistics

Unemployment continues to rise at alarming rate

·         Unemployment sees the biggest rise in two years

·         Young people still struggle to find work as the number of unemployed 18-24s creeps closer to the million mark

·         Number of unemployed women see biggest rise since 1988

Unemployment has risen again, this time hitting 2.51 million across the UK. The troubling news indicates a worsening of the labour market with the number of unemployed people increasing by 80,000 – the largest increase since the three months to August 2009.

The figures have been published as part of the monthly Labour Market Statistics from the Office of National Statistics. Young people seem to be the biggest casualties this quarter with unemployment in the 18 to 24 age group rising by 77,000 to reach 769,000. The ominous million mark is edging closer as the young are largely unsuccessful in reversing their own fortunes.

Fears about the continuing rise in female unemployment were realised as the figure rose by 41,000 to 1.06 million, in line with the rapid fall in employment in the public sector.

Carmen Watson, managing director of Pertemps Recruitment Partnership, said, “The shocking unemployment figures bring into sharp focus the challenges the economy is currently undergoing. It is important to engage both young people and women who seem to be the hardest hit in the latest set of figures. Employers must recognise these groups can add considerable value to their workforce and ultimately help us to become more competitive as a nation on the global stage.

“The public sector has shed a large amount of workers and although the private sector has employed more people, it has been unable to pick up the pieces at a fast enough rate. Women have been disproportionately affected by this and we’re worried that cuts to childcare and benefits will make the situation more difficult in the coming months.”

Carmen added, “Despite the bleak outlook represented in today's ONS figures, we’re seeing reports that the temporary market remains stable and in certain sectors is showing a slight increase in demand as companies choose to hire a flexible workforce until confidence in the longer term picture is restored. The unemployed workers who have up to date skills and experience required are encouraged to take up temporary employment where possible as this often leads to permanent employment when the market picks up.”

ILO unemployment figures - "counterintuitive, but competition for companies looking to hire is tougher than ever" - comment from recruitment site Jobpage.com

Matthew Ogston, founder of UK recruitment website, Jobpage.com, comments:

"There can be few more potent illustrations of the weakness of the economy than these stubbornly high unemployment figures.

"The jobs market has undergone significant change over the past three to four years.

"Across the market as a whole, the number of permanent positions available has certainly dropped off - but at the same time there has been a rise in the amount of contract work.

"In the current climate, companies are inclined to reduce risk and remain flexible and this is exactly what contract work offers them, even if it's more expensive in the short term.

"What we are also noticing is that that many potential employees are being attracted to contract work, as it pays more and is often easier to secure than a full-time position. In a sense, contract work is a hedge for them too.

"But as the pool of talent looking for permanent jobs shrinks, it is becoming harder for companies to find the best permanent staff.

"So though it may seem counterintuitive when unemployment is so high, the competition for companies looking to hire the best permanent staff is tougher than ever."

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Comment from the Director of the Institute for Employment Studies on today’s unemployment figures from the ONS.

Labour market downturn gathers momentum

All of the indicators in the latest figures released today by the Office of National Statistics suggest a further deterioration in the UK labour market:

¦   For the second month in succession the headline unemployment figure from the Labour Force Survey increased significantly. It grew by 80,000 over the quarter to July, taking the total to 2.51 million;

¦   Similarly, the more recent monthly claimant count figure for unemployment, recording the numbers claiming Jobseekers’ Allowance rose again by 20,300 in August. This is the sixth successive month of increase, taking the total to 1.58 million, and rapidly approaching its previous peak in October 2009. This growth can no longer be explained simply by changes in benefit rules (mainly affecting lone parents).

¦   Employment fell again (by 69,000) in the quarter to July. The latest figures for public and private sector employment (for the quarter to June) show that the total in the public sector fell by 111,000, greatly outstripping the growth of 41,000 in the private sector. Compared with the previous year, public sector employment has now fallen by nearly a quarter of a million.

¦   The number of job vacancies continued its downward drift to 453,000 in the three months to August.

¦   Redundancies increased strongly over the quarter, with women and public sector employees worst affected.


Nigel Meager, Director of the Institute for Employment Studies, comments:

“Despite a few false dawns in recent months, the UK labour market remains in the doldrums. Since the recession began in 2008, unemployment grew less than many commentators expected to nearly 2.5 million by May 2009. However, it has stubbornly remained at that level for over two years. Similarly, the number of job vacancies fell from around 700,000 to 425,000 in the first year of recession, but has been stuck below 500,000 for the last two years.

“Today’s figures raise a real concern that, after two years bumping along at this low level of demand, the jobs market, rather than entering a recovery stage, is about to take a turn for the worse, with all the key figures moving in the wrong direction. The early impact of the public sector cuts is also now starting to show in the figures and, for the first time this quarter, public sector job loss now considerably outweighs any growth in the private sector.

“None of this is at all surprising given the state of the macro-economy. It’s now three and a half years since the onset of recession. At the same point following each of the last two recessions in the 1980s and 1990s, GDP was back above its pre-recession level, while this time national output is still languishing about 4 percentage points below that level.

“Informed commentators have  drawn attention to the chronic lack of demand in the labour market for several months. It’s probably too late to stop a surge in unemployment in the autumn and winter ahead, given that much of the impact of spending cuts is yet to come, and the spending power of those in work is being tightly squeezed by inflation. But urgent action is needed to avert more lasting labour market damage, especially to young people, and to those with low skills, who may never fully recover from an extended period of unemployment.

“It’s hard to avoid the conclusion that policy-makers now need to stop sitting on their hands and start looking for ways to get spending power into the economy quickly. Many of the interventions commonly floated won’t do this: recent experience suggests that another round of quantitative easing will simply swell the balance sheets of the banks, while there’s no evidence that reducing top tax rates will help. Other growth-enhancing measures to support investment, innovation and skills, although worthwhile, will take years to have an effect. What we need now are interventions to address the immediate jobs deficit, which arises from lack of demand. Common sense suggests that stemming the loss of jobs will require some kind of fiscal stimulus (such as a VAT reduction), perhaps also coupled with a slowing of the pace of deficit reduction.”

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REC comment on latest unemployment figures

The number of people in the UK out of work during the three month until July rose to 2.51 million, an increase of 80,000, according to the latest figures published today by the Office for National Statistics.

Commenting on the latest statistics, Kevin Green, the REC’s Chief Executive, said: “The latest unemployment figures are disappointing but not surprising. A combination of factors including a slowing economy,  more young people coming onto the jobs market, public sector cuts and reducing business confidence have all come together to create higher unemployment. This tallies with the REC’s monthly Report on Jobs which shows a deceleration in demand for staff over the past five months.

“However, demand for jobs in some sectors remains steady and the UK jobs market is bending but not breaking. We need the Government to start delivering on its growth agenda if we are to boost private sector job creation and build momentum for long-term recovery. This should include practical measures such as National Insurance Contributions holiday for employers taking on young jobseekers.”

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CBI COMMENTS ON LATEST UNEMPLOYMENT DATA

The CBI today (Wednesday) commented on latest official unemployment figures showing the number of people out of work rose by 80,000 to 2.51 million in the three months to July.

Neil Carberry, CBI Director for Employment Policy, said:

“This rise in unemployment is troubling, particularly the growing number of young people out of work.

“With one in five 16-24 year olds currently unemployed, tackling youth unemployment must be a priority. Businesses are eager to play their part through apprenticeships, training and work placements, but now the Government must do all it can to create the right conditions for the private sector to create much-needed jobs.”

The CBI has been looking at ways of getting all of the UK working by tackling long-term unemployment and inactivity. Further details can be found at: http://employment.cbi.org.uk/reports/mapping-the-route-to-growth-rebalancing-employment