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Fall in unemployment could be the calm before the storm

14 July 2010

The latest ONS release showed a fall in unemployment of 34,000 in the three months to May, and overall unemployment now standing at 2.47 million. The claimant count measure also fell, by 20,800 between May and June 2010, and is now 1.46 million.

The number of people in work in the three months to May also increased by 160,000. This was driven largely by a growth in part-time employees increasing by 117,000, and self-employment, increasing by 59,000.

The number of vacancies for the three months to June was up by 10,000 to reach 486,000.

For the first time since March 2009 the numbers of economically inactive people fell by 62,000. This fall affected most categories of inactivity, with the notable exception being the number inactive due to long-term sickness which again rose, by 54,000, to reach 2.07 million.

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

‘There are some encouraging signs of stronger labour market demand in this month’s figures, with unemployment down by 34,000, and employment growing by 160,000. Vacancies have also risen again, though they remain well below pre-recession levels. However, it is of serious concern that long-term unemployment has increased again to over three-quarters of a million. Urgent policy action is needed to support this group back into work to avoid the damaging long-term social impacts experienced in previous recessions.’

The vacancy figures to June 2010 show the first real signs of the public sector downturn, with vacancies falling across public sector industries. Mr Meager continued:

‘Official figures are yet to register a major downturn in public sector employment, but this will inevitably follow. Recruitment to public administration has dropped dramatically, with less than one vacancy per 100 employees, far lower than any other sector apart from construction, and half the level of a year ago. This is also the only sector in which redundancies have increased over the last year. These trends will accelerate in the months ahead, and it is unlikely that the real, but muted recovery in the private sector will be sufficient to offset significant public sector job loss.’

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.