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Blow for Labour as unemployment rises

UNEMPLOYMENT has surged to its highest level in 16 years, in a major blow for Labour ahead of the general election.

The Labour Party says it has protected jobs in the wake of the deepest recession in a generation, but unemployment in the UK increased by 43,000 to 2.5m in the three months to February.

That means eight per cent of the workforce is now unemployed – the highest rate since 1996, according to the Office of National Statistics.

Despite the rise in the unemployment rate, the number of people claiming jobseekers’ allowance actually fell by 32,900 in March to 1.54m, a steeper drop than economists had been expecting.

Shadow secretary for work and pensions Theresa May said the unemployment figures were “grim reading for tens of thousands of families up and down the country”.

Meanwhile, Liberal Democrat Treasury spokesman Vince Cable blamed Labour for rising unemployment, saying the party’s record “speaks for itself”.

But he also hit out at the Tories, saying that plans to cut public spending this year would “pull the rug from under the recovery” and push unemployment even higher.

Graeme Leach, chief economist at the Institute of Directors, pointed out that public sector employment has actually risen year-on-year.

He added: “The latest figures show public sector employment up 46,000 year-on-year, while private sector employment is down 527,000 year-on-year.”

Employers’ organisation the CBI said there was little cause for cheer, despite the fall in claimant count unemployment.

“The number of people actually in work is still falling, there has been a further rise in long-term unemployment and vacancies remain at low levels,” said Lai Wah Co, the CBI’s head of economic analysis.

Citi economist Michael Saunders said the number of people claiming benefits was a “better guide” to the condition of the labour market, because it was more up to date.

He added: “Surveys suggest that hiring plans are picking up. The labour market puzzle may reflect an outflow of migrant workers.”