Job cuts rise as tightening begins to bite

 
Julian Harris
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UNEMPLOYMENT rose in the three months to October as government job cuts took their toll, official data showed yesterday.

Unemployment crept up to 7.9 per cent, the highest rate in six months, representing an increase of 35,000 people to 2.5m in total.

The news came from the Office for National Statistics (ONS), which also announced that government sector employment was down 33,000 in the third quarter of the year.

Employment in the private sector remained steady, totalling 23m, the same as the previous quarter.

The figures are in line with forecasts made by the government’s fiscal watchdog, which expects 7.9 per cent unemployment for this year, with a slight rise to eight per cent next year.

But unemployment is projected to fall from 2012 onwards, as “private sector job creation more than offsets falling public sector employment,” the Office for Budget Responsibility (OBR) said last month.

Government employment could drop by 330,000 as part of the austerity measures. Yet there are still 6m government employees in the UK, according to the ONS data, including over half a million civil servants.

Unemployment benefit claimants actually fell by 1,200 in November to 1.46m. And 56,700 fewer people claimed Jobseekers’ Allowance compared to the same time last year.

And in London unemployment fell by 4,000 from August to October.

The coalition is trying to boost the jobs market by cutting tax, simplifying regulations, and sealing international trade deals, employment minister Chris Grayling said.

“We are increasing the support available to people,” he added.

But opposition leader Ed Miliband said the coalition’s confidence in the economy would “seem very hollow” to people affected by unemployment.

ANALYST VIEWS: WHAT CAN WE DO TO STOP UNEMPLOYMENT RISING? INTERVIEWS BY JULIAN HARRIS

MATTHEW SINCLAIR | TAXPAYERS’ ALLIANCE
People on benefits have little incentive to work due to high, complex taxes. The minimum wage of £5.80 an hour can be worth as little as 26p. By adopting a more realistic poverty line, the government could save enough money to lower the marginal tax rate, and tackle long-term unemployment.

SIMON KIRBY | NIESR
I would limit fiscal consolidation until we have robust economic growth. Under the current plans, unemployment will hit 8.6 per cent next year. Long term unemployment leaves a big scar, and we must avoid ending up with NEET [not in employment, education or training] young people.

DAVID KERN | BRITISH CHAMBERS OF COMMERCE
Given the expected fall in public sector employment, it is critical that businesses are able to create new jobs. The labour market needs to remain as flexible as possible. Onerous regulation must be scrapped or suspended so that the private sector can absorb the temporary public sector job losses.