UK unemployment continues to edge up

15 February 2012 Last updated at 17:46 GMT

http://www.bbc.co.uk/news/business-17039513

UK unemployment rose by 48,000 to 2.67 million in the three months to December, official figures have shown, the smallest rise in almost a year.

Women made up two-thirds of that increase and there was a new record in the number of people working part-time who want full-time jobs.

The unemployment rate edged up to 8.4%, the Office for National Statistics said, the highest for 16 years.

There was also a new record for the number of jobless young people.

The number of 16 to 24-year-olds without a job rose 22,000 to 1.04m, taking the unemployment rate to 22.2%. This figure includes young people in full-time education who are also looking for work.

The number of people claiming Jobseeker's Allowance in January increased by 6,900 to 1.6 million.

Growth hopes

With the number of job vacancies rising to 476,000 in the three months to January, economists suggested the worsening employment outlook had eased.

"[This] supports hopes that the economy will return to modest growth in the first quarter and avoid recession," said Howard Archer of IHS Global Insight.

"Admittedly claimant count unemployment rose... but this is well down on the increases seen a few months ago."

Graeme Leach, chief economist at the Institute of Directors, said: "The labour market isn't signalling recession but it's hardly suggesting recovery either."

The figures came as the Bank of England published its quarterly report on inflation. It said the UK economy would "zigzag" this year, dipping in and out of growth, but avoid going back into recession.

"We are moving in the right direction," the Bank's governor, Sir Mervyn King, said, pointing out that the process would involve "a painful adjustment".

'Squeezed' families

Prime Minister David Cameron described the latest rise in unemployment as "disappointing", but pointed out that the number of people in work had risen, too.

"We need to get the economy growing faster. We are rolling up our sleeves and helping people to get jobs," he said.

Labour's shadow chancellor, Ed Balls, accused the government of "complacency".

"If we don't act, we will pay a long-term price as a society because you can't just get rid of long-term unemployment quickly.

"We saw that in the 1980s. I fear that we are making the same mistake again and I do think the government's got to... start talking about what can be done."

More in work

Joblessness continued to rise in all parts of the UK, apart from Wales, where it fell 3,000 to 134,000.

However, the proportion of the workforce in paid work also rose across the UK.

The number of people in jobs went up by 60,000 in the last three months of the year to 29,13 million.

This meant the employment rate rose by 0.1 percentage points in the three months to December to 70.3%.

The apparent contradiction - in the rise in both unemployment and employment - is explained by the fact that there has been a rise in the number of part-time workers and the number of people classified as economically inactive has dropped.

The inactivity number fell by 78,000 to 9.29 million. This included a drop in the number of people categorised as long-term sick or retired, who went back into the workforce.

Full and part-time

The TUC's general secretary, Brendan Barber, said: "With one in three jobseekers looking for work for over a year, and around six unemployed people for every job, the government's mantra that there are plenty of jobs out there just doesn't ring true.

"It's encouraging to see a small rise in employment, but this is entirely down to people taking part-time work because there are no full-time jobs available."

That number increased by 83,000 on the quarter to 1.35 million, the highest figure since comparable records began in 1992. The TUC says this reflects the amount of people who are underemployed.

The ONS said that public sector employment had dropped while that in the private sector had gone up.

The latest available figures, for September 2011, showed that the number of people with public sector jobs fell by 67,000 from June to 5.99 million.

In the same period, the number of private sector jobs rose by 5,000 to 23.12 million.

Earnings squeezed

The ONS data also showed that average earnings increased by 2% in the year to December, unchanged from the previous month.

That figure lags well below the rate of inflation and indicates a continued squeeze on spending power.

Earlier this week, official figures showed the Consumer Prices Index (CPI) measure of inflation fell to 3.6% in January, from 4.2% in December.

Vicky Redwood, economist at Capital Economics, said: "We continue to expect unemployment to rise much further in response to the weakness in the wider economy.

"At least with inflation falling, the squeeze on real pay is easing. But it won't be for a few months yet until real pay actually starts to rise again."