The shock unemployment totals – at record highs among young people where the figure is over 20 per cent for 16-24-year-olds and expected to exceed a million this year – comes on top of 4 per cent inflation and falling incomes.
Combined with the unforeseen contraction in economic output in which the economy shrank by 0.5 per cent at the end of last year the figures test the credibility of government claims that an economic recovery is underway and, at the very least, demonstrate its fragility.
The Office of National Statistics figures confirmed the findings of a number of organisations such as the Chartered Institute of Personnel Development and services firm KPMG whose own research suggested private sector hires were not keeping pace with public, and private, sector redundancies.
They found that two-thirds of employers and organisations surveyed, including three-quarters of local authorities, expected to shed at least 13 per cent of staff. The CIPD forecast unemployment to reach 2.7 million or 9 per cent this year with a continuing rising next year. The Office of Budget Responsibility has been predicting 8.1 per cent unemployment this year increasing next year but said it expects it to eventually drop to 6.1 per cent by 2015.
Ministers claimed there were 40,000 more job vacancies in the three months to January than in the previous three months. But the ONS said that most of these new vacancies were temporary jobs, working on the 2011 census. Excluding this, there were 8,000 more vacancies.
The Office of National Statistics said the claimant-count measure of unemployment rose by 2,400 in January to 1.5 million. Economists had predicted it would fall by 3,000. The number of women aged between 25 and 49 claiming the benefit rose by 6,600 in January to reach 244,500, the highest figure since records began in 1997.
The Government is looking to the private sector to create enough employment to absorb the estimated 330,000 job cuts expected in the public sector by 2014-15 but City economists said the economy would need to grow by at least 2 per cent a year for this to happen.
The ONS said the international measure of unemployment rose by 44,000 in the three months to the end of December to 2.5 million or 7.9 per cent. Unemployment for economically active 16 to 24-year-olds rose 66,000 to 965,000 in the fourth quarter of 2010, the highest level since records began in 1992.
Other data from the ONS showed that average earnings rose by 1.8 per cent in the year to December last year, slightly down on the
2.1 per cent growth in the year to November.
The figures also showed that unemployment fell in Scotland by 13,000, but rose in England, Wales and Northern Ireland.
