UK unemployment hits 17-year high

The number of unemployed people in Britain has climbed by 128,000 to a 17-year high, or 8.3 per cent of the workforce, the Office for National Statistics said on Wednesday.

The jobless figure passed 2.6m for the August-to-October period – the highest number since 1994. But the rise has slowed since the summer and jobs market conditions are no longer deteriorating as quick­ly as earlier in the year.

Click to enlarge

The number of people claiming jobless benefits last month rose by 3,000 to 1.6m compared with predictions of about 13,000. Economists pay close attention to these figures because they are timelier than other labour market data.

Economists were divided over how much to read into the official statistics. “Today’s figures were encouraging in as much as they might have been worse, but that’s probably the best thing you can say,” said John Philpott, chief economist at the Chartered Institute of Personnel and Development.

Others were more optimistic. Allan Monks, an economist at JPMorgan, said the smaller-than-expected rise in the claimant count “points to more moderate overall job losses in the months ahead, and is far from consistent with the UK falling into recession”.

The figures showed a sharp disparity between the austerity-bound public sector and the private sector.

Public sector employment has fallen by about 276,000 this year, almost counterbalanced by a 262,000 rise in private sector employment. However, in the latest quarter, private sector employment rose by only 5,000 while public sector employment dropped by 67,000. Recent surveys suggest private sector employers are growing cautious as the eurozone’s problems threaten the health of the global economy.

Some employers – such as Thomas Cook travel on Wednesday – have been forced to cut jobs. Many are simply holding back on hiring.

Michael Saunders, an economist at Citi, pointed to a “huge” 252,000 drop in the number of employees (people who are not self-employed) over the quarter.

The number of self-employed people rose by 166,000 to the highest level since records began in 1992. “It may well be that some people, having lost their job, categorise themselves as self-employed but really are unemployed or at least under-employed,” he said.

The politically sensitive problem of youth unemployment continued to worsen. The number of jobless aged between 16 and 24 pushed further past the 1m mark – and now stands at about 22 per cent – although this figure includes almost 300,000 people in full-time education looking for part-time work.

Meanwhile, total pay rose only 2 per cent in the three months to October compared with a year earlier – down from 2.3 per cent in the three months to September. This suggests there is little chance of an inflationary spiral taking root. However, it is bad news for living standards since consumer price index inflation is running at 4.8 per cent.