Youth unemployment rate hits record high of 20.5%

Published by Jon Land for 24dash.com in Central Government and also in Communities

A record number of 16 to 24-year-olds are out of work and more people than ever are in part-time jobs because they can't find full-time employment, a grim set of official figures revealed today.

Unemployment jumped by 44,000 in the final three months of 2010 to just under 2.5 million, a jobless rate of 7.9%.

But the youth unemployment rate is now 20.5% following a 66,000 increase to 965,000, the highest figures since records began in 1992.

The number of people claiming Jobseeker's Allowance increased by 2,400 in January to 1.46 million, with the number of female claimants rising for the seventh month in a row to reach almost 450,000, the highest figure since 1996.

The number of people working part-time because they could not find full-time jobs increased by 44,000 to 1.19 million, the highest total since records began in 1992.

The number of people classed as economically inactive rose by 93,000 over the latest quarter to 9.36 million, a rate of 23.4%, including 1.57 million who retired before the age of 65, the highest figure since records began in 1993.

There was a 68,000 fall in employment, down to 29.12 million, according to today's data from the Office for National Statistics.

Public sector employment fell by 33,000 to six million in the quarter to September, while the number of people in private firms was unchanged at 23.1 million.

The number of jobs fell by 170,000 in the year to last September to 30 million.

Long-term unemployment is getting worse, with an increase of 17,000 in the number of people out of work for over a year, to 833,000.

Average earnings increased by 1.8% in the year to December, down by 0.3% on the previous month, giving average weekly pay of £430.

Ministers said they welcomed news that the labour market was "stabilising" after a "difficult" last few months, pointing out that there has been a sharp jump in the number of vacancies to half a million across the country, the highest in two years.

The Government said it reaffirmed its commitment to tackling the youth unemployment problem it inherited, including helping the 600,000 young people who have never held down a job since leaving school or college.

Work and Pensions Minister Chris Grayling said: "It's been a difficult few months in the labour market but things do now seem to be stabilising. The rise in the number of vacancies is particularly encouraging.

"The challenge for us now is to push ahead with our welfare reforms as quickly as possible so we start to move more people off benefits to take advantage of those vacancies."

The Government said its new Work Programme is gaining momentum, with more than 170 tenders submitted from 30 organisations from private, public and voluntary sector organisations.

The programme will be in place by the summer and will offer personalised, tailored support to get people back into jobs.

Paul Kenny, general secretary of the GMB union, said: "This rise is no surprise since the Government itself, with the vocal support of the bankers who caused the recession, is deliberately creating unemployment with public sector cuts.

"Tens of thousands of council workers who volunteered for redundancy have already left and have joined the unemployed register. This is on top of the tens of thousands of vacant jobs in local councils that have already been scrapped.

"So far GMB has logged over 162,000 direct job losses in the pipeline in 290 councils with more to come.

"That figure does not include job losses in the related voluntary and private sectors due to cuts in public funds or job cuts in other parts of the public sector."

Paul Kenny, general secretary of the GMB union, said: "This rise is no surprise since the Government itself, with the vocal support of the bankers who caused the recession, is deliberately creating unemployment with public sector cuts.

"Tens of thousands of council workers who volunteered for redundancy have already left and have joined the unemployed register. This is on top of the tens of thousands of vacant jobs in local councils that have already been scrapped.

"So far GMB has logged over 162,000 direct job losses in the pipeline in 290 councils with more to come.

"That figure does not include job losses in the related voluntary and private sectors due to cuts in public funds or job cuts in other parts of the public sector."

Steven Kirkpatrick, managing director of recruitment firm Adecco, said: "There is still an imbalance between the number of new roles becoming available and the high proportion of people seeking employment.

"Until this has been properly addressed, the pain felt among today's jobseekers will remain - a trend which only looks set to worsen as further job losses in the public sector loom.

"While the steady stream of good-quality candidates remains, allowing employers to benefit from a wide pool of strong, available talent, this does little to improve overall employment figures."

John Salt, director at recruitment firm totaljobs.com, said: "The latest unemployment figures make grim reading, particularly in terms of youth and female unemployment.

"With the private sector - hit by increased costs, timid consumer demand and suffering a lack of confidence - unable or unwilling to create the number of permanent jobs to offset the cuts in local authorities, I think we'll continue to see rises in unemployment throughout the year, before the confidence and economy improves later in 2011."

Martina Milburn, chief executive of youth charity The Prince's Trust, said: "There are now enough unemployed young people to fill every football stadium in the Premier League, with almost 200,000 left queuing outside.

"If we fail to help them into work, it will have a devastating impact on young people, their families and the economy.

"A new report published by The Prince's Trust and Citi Foundation shows that disadvantaged young people helped into work or self-employment could boost the UK economy by millions."

David Kern, chief economist at the British Chambers of Commerce, said: "It is particularly worrying that the number of people who are working part-time because they could not find a full-time job, and the number of young unemployed, both rose to the highest level since records began.

"The figures confirm that the economy is facing serious challenges over the months ahead, and we believe that UK unemployment will rise by a further 100,000 over the next year to around 2.6 million. With private sector employment likely to decline, it is critical that every effort is made to enable businesses to create jobs.

"The relatively low earning figures support our assessment that the squeeze on incomes will eventually dampen inflationary pressures.

"A premature rise in interest rates in these circumstances would risk damaging the economy, and the MPC should wait until the recovery is more secure before considering an increase.

"On its part, the Government should ensure that the labour market remains flexible, and should avoid imposing onerous regulations on business."

John Walker, chairman of the Federation of Small Businesses, said: "We are concerned that the rise in unemployment over the Christmas period - the busiest time of year for small firms - is going to have a damaging effect on employment levels over coming months.

"With the rise in youth unemployment to almost one million, small firms will need all the encouragement they can get if they are to take the lead on job creation by taking on staff, including internships and apprenticeships.

"The Government must lend a helping hand to small businesses that want to take on skilled staff to stem rising unemployment."

Graeme Leach, chief economist at the Institute of Directors, said:
"Unemployment is up and employment is down. This really is the feel bad recovery. Thankfully there is no evidence of a wage-price spiral developing, as wage pressure appears to be falling, not rising.

"This is good news for those fearing an interest rate rise because rising wage inflation could have tipped the monetary policy committee towards an increase. The latest labour market statistics provide more evidence that a rate rise isn't required."

TUC general secretary Brendan Barber said: "Young people were hit hardest by the recession and today's figures show they are suffering in our so-called recovery too.

"Government action so far - trebling tuition fees, scrapping the Education Maintenance Allowance and vital job support - has only made things worse for young people.

"There are now fears that the Government's upcoming work programme is not up to the job of tackling mounting joblessness, with much of the wider support available through Jobcentre Plus also facing cutbacks.

"The truth is that no amount of restructuring benefits will deal with the fact that there are simply not enough jobs to go around. Without a proper growth strategy, the tragedy of mass unemployment will be with us for many years to come."

Nigel Meager, director of the Institute for Employment Studies, said:
"The latest figures suggest yet again that any recovery in the private sector is still too weak to offset the intensifying job loss in the public sector.

"Public sector redundancies are already running at 40% more than a year ago, and the recent spate of redundancy warnings means that this is bound to accelerate."

Dave Prentis, general secretary of the Unison union, said: "The Government is failing miserably to get unemployment under control. We need to get Britain working to have any hope of economic recovery.

"Far from jobs growth fuelling the recovery, the number of jobs fell by a whopping 170,000 in the year to last September.

"Women and young people seem to have been abandoned by the Tories. Both groups are really struggling in this shrinking jobs market.

"The Government's recovery remedy is a toxic prescription for our economy, and the biggest tranche of public sector job losses - that will see hundreds of thousands more pile on to the dole queues - are yet to come."

Ian Brinkley of The Work Foundation said: "This mini-recession in the labour market as a whole is turning into a major crisis for young people.

"Over the latest quarter, total employment for those under 25 went down by over 90,000 while employment for those over 25 went up very slightly by 25,000. Unemployment for those under 25 went up by 66,000 while unemployment for those over 25 went down by 22,000.

"Young people's employment will not recover significantly until employers start hiring them again in significant numbers and that depends on the overall state of the economy.

"In the meantime, the Government needs to look again at levels of support for young people through temporary employment programmes and encouraging more apprenticeships and paid intern placements."

Vicky Redwood, senior UK economist at Capital Economics, said the figures provided further evidence that the jobs recovery had "gone into reverse", predicting that unemployment will climb towards three million over the next few years.

Almost 100,000 people gave up looking for work during the last three months of 2010, according to analysis by the Institute for Public Policy Research.

Tony Dolphin, senior economist at the think tank, said: "These latest figures show that the employment landscape is looking so bleak that increasing numbers of people are giving up the search for work altogether.

"While the vast majority of people who lose their job do manage to find a new one, people who give up looking for work are much less likely to ever re-enter the labour market.

"There is a real risk that we are going back to the recessions of 1980s and 1990s when hundreds of thousands of people retired early or went onto long term benefits because they saw no prospect of getting a job. During that period the numbers on incapacity benefits trebled - and we have lived with the consequences ever since."

Asked if David Cameron was concerned about the levels of youth unemployment, the Prime Minister's official spokesman told reporters: "Yes, but it is worth recognising that youth unemployment has been a problem for many, many years.

"We have seen persistently high levels of youth unemployment even when unemployment was falling overall in the economy.

"It's clearly something we are concerned about and something we intend to address."

The spokesman rejected arguments that the Government's economic policy was making the unemployment position worse: "What we need is an economic policy which sees a rebalancing in the economy and that's what we are doing through our deficit reduction plan.

"As a result of that deficit reduction plan, interest rates should be able to stay lower for longer.

"What we need to see is a private sector recovery and growth in private sector jobs. You will see from the figures today that vacancies are 20,000 up from last year and employment is up on last year."