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Challenging times ahead for the new government

12 May 2010

There was mixed news from the ONS May release. The broader ILO measure of unemployment grew by 53,000 to reach 2.51 million in the three months to March. On the other hand, the claimant count fell for the third consecutive month, down by 27,100, to 1.52 million in April.

Overall, employment continued to fall, by 76,000 over the quarter, to 28.83 million. The employment rate is now 72.0 per cent, the lowest since September 1996. The number of vacancies for the three months to April was also down by 6,000, indicating that the pick-up in labour demand which appeared to be starting in the latter part of 2009 may have stalled.

Nigel Meager, Director of the Institute for Employment Studies, commented on the latest figures:

‘Despite the early signs of economic recovery, it is clear that the new government inherits a very fragile labour market. Unemployment stands at 2.5 million, economic inactivity at over 8 million, and there are more than 1 million part-time workers unable to find full-time work. We will also begin to see public spending cuts feed into the labour market this year. It is difficult to escape the conclusion that unemployment is likely to remain high for some time without sustained and substantial economic growth. The economic recovery is by no means securely established and it is to be hoped that the new administration’s decisions on the timing of deficit reduction will take account of the risk of further damage to a labour market that remains weak.’

The figures also show that there remain serious concerns about the level of youth and long-term unemployment. Long-term unemployment was up by 94,000 to reach 757,000, and youth unemployment was also on the rise again, by 9,000, having started to fall in the previous quarter.

Nigel Meager continued:

‘These are hugely challenging times. Nearly 18 per cent of young people are unemployed, and nearly one in three of the unemployed are now long-term unemployed. Continued action to support these groups back into work will be critical in preventing the legacy of long-term worklessness in many communities following previous recessions. Any early dismantling of the existing measures targeted at young people and long-term unemployed would be premature, on the basis of these figures.’

Further information

Nigel Meager is a labour economist by training, and a well-established international expert on labour market and employment policy issues. Director of the Institute since 2004, he has a long and varied research track record covering the functioning of national, regional and local labour markets, unemployment, skill shortages, labour market flexibility, changing patterns of work and equal opportunity policies and practices.

For further information or comment, contact Nigel Meager or call , or the IES press office, or call 01273 763414.