UK labour market stumbles

Julian Harris
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EMPLOYMENT dropped by 68,000 in the final three months of 2010, reflecting the labour market downturn that economists expect will continue through the year.

There are now 29.12m employed people in the UK. The unemployment rate stuck at 7.9 per cent, yet the figures showed an extra 44,000 people unemployed, compared to the previous three months.

“Overall, not a good report, but nor was it terrible,” commented Alan Clarke of BNP Paribas. “The data have stopped improving as the pace of GDP growth has slowed,” he said.

Britain’s GDP was knocked back half a percentage point in the quarter due to severe effects from the snow, the Office for National Statistics (ONS) estimated last month.

“If growth bounces back into line with the surveys, then this soft patch in the jobs numbers will probably prove temporary,” Clarke said. Yet if growth stutters, “we should get used to disappointing jobs numbers,” he added.

The number of people claiming unemployment benefit increased in January, the claimant count rising by 2,400, having fallen by 3,400 in December.

“Admittedly, the rise is pretty marginal, but it is nonetheless the first increase in four months,” said Vicky Redwood of Capital Economics.

The results provoked calls for the coalition government to boost private sector employment.

“On its part, the Government should ensure that the labour market remains flexible, and should avoid imposing onerous regulations on business,” said economist David Kern of the British Chambers of Commerce.

Companies face £23bn in costs from new employment laws, he said.