Unemployment soars as economy weakens

Tim Wallace
Follow Tim
UNEMPLOYMENT hit a 17-year high in August as new private sector jobs failed to offset public sector lay-offs, according to the Office for National Statistics’ figures, out yesterday.

According to the latest statistics from the Labour Force Survey, 8.1 per cent of the workforce was unemployed from June to August .

That represents an increase of 114,000, taking the total to 2.57m from 2.45m in March to May.

And in September, 1.6m people claimed job-seeker’s allowance, up 17,500 on August’s figures.

Youth unemployment, excluding full time students, rose to 721,000, or 20.2 per cent – 74,000 more than in the previous three months.

Total employment fell by 178,000 over June, July and August. Only 2,000 were full time roles with the vast majority of the fall accounted for by over 175,000 part-time jobs.

Analysts are split on the reasons for the huge decline in part-time roles.

“Large numbers of part-time staff wok in the public sector, which is responsible for most losses,” said the Institute for Employment Studies’ Nigel Meager. “Also, during the recession many employers held onto skilled workers, cutting hours instead of jobs. Now demand is falling again, they may have to cut those jobs entirely.”

David Kern, chief economist at the British Chambers of Commerce pointed to other factors. “Many retail staff are part-time, and the industry has been hit by falling consumer confidence so may be cutting jobs. ”

From August 2009 to August 2010, 400,000 part time jobs were created. Economists say this too may be a reason for the recent sharp decline.

“Part-time jobs may be the easiest to add and the easiest to lay off,” said Howard Archer, from IHS Global Insight. “Furthermore, firms may also see full-time workers as more skilled.”