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Unemployment Exceeds 2 Million

Unemployment Exceeds 2 Million

Following the announcement from the Office for National Statistics that the unemployment figure has exceeded the two million mark, Kevin Green, chief executive of the Recruitment and Employment Confederation (REC) comments:

As the jobs market contracts, we need to make sure every job opportunity is maximised. As part of this, the REC is currently working with the Government to ensure that temporary, interim and contract positions are utilised as a method of getting people into work. Even in the current climate, there are over a million temporary assignments taking place every week.

Feedback from recruiters confirms that a greater proportion of job-seekers in this recession are looking for higher-end positions. It is crucial that the right support is provided to these job-seekers which is why the private sector recruitment industry, and the specialist agencies, will be working in increasingly close cooperation with Jobcentre Plus.

It is equally important to address barriers to job creation. An urgent priority is to delay measures due to come into force next month which would add VAT to the provision of temporary staff in a number of key sectors, putting around 150,000 temporary jobs at risk. Postponing the removal of the existing concession would enable employers and agencies to find ways to deal with the change in a way that will not jeopardise these jobs in this crucial time for the UK labour market.

Analysing the latest ONS figures John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD) finds that these are the most doleful set of jobs figures since the start of the recession and highlights the groups, sectors and regions that have so far borne the brunt of the jobs downturn.

Dr Philpott comments as follows:

Overall labour market situation and outlook

These are the most doleful set of UK labour market figures since the start of the recession. Not only is unemployment back to where it was in 1997 but it now looks as though we are heading towards the worst outlook for jobs in the UKs post-war history. Full employment is not just slipping away, it is sinking without trace.

The rise in the headline level of unemployment above 2 million is only part of the sorry story. Much more alarming is a surge in claimant unemployment in February the monthly increase of 138,000 in the number of people claiming Jobseekers Allowance surpasses even the darkest days of rising unemployment in previous recessions. The surge was driven by a flood of new claimants, reflecting todays other ONS statistics showing that firms cut almost a quarter of a million employees (248,000) in the final three months of 2008 and made 266,000 people redundant in the three months ending in January 2009.

The only bright spots in the figures are increasing part-time employment and temporary working, which people are turning to as an alternative to the dole, and self-employment, though CIPD soundings suggest that this might reflect a noticeable tendency of some firms to cut in-house services and instead contract former employees to supply the same services as external suppliers.

Sector impact

The impact of the recession on jobs is fairly broadly based across the private sector. In proportionate terms the big losers according to the latest ONS figures are finance and business services, closely followed by manufacturing, with shops, hotels and restaurants another sector being hard hit. These sectors are at the forefront of a slump in job vacancies as well as redundancies.

As the CIPD expected, the latest figures show that the private sector is bearing all the pain of the recession, with employment in the public sector continuing to rise and public sector pay running away from that in the private sector. In the year to January, pay rises for public employees were rising at 4% (including bonuses) compared with just 1.4% for employees in the private sector and 1.8% for the economy as a whole.

Gender impact

As has been the case so far during the jobs downturn, men are being hit much harder than women, whether one looks at job prospects, redundancies or unemployment.

Age impact

The recession is having a far bigger impact on employment for young people aged under-25, with older people now protected by anti-age discrimination laws and employers far less willing than in previous recessions to meet the pension liabilities associated with allowing older staff to take early retirement.

However, the age-impact of the recession looks different if one instead looks at unemployment. As the downturn bites, more young people seem to be turning to education as an alternative to joblessness. Older people meanwhile, although more likely to keep their jobs in the downturn, are finding it harder to get jobs if they do end up unemployed.

Regional impact

Compared with previous recessions, this jobs downturn looks far more broadly based in its regional impact. Different regions are experiencing their own monthly ups and downs but overall this is a were all in it together recession with no obvious North-South divide so far.


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