First fall in unemployment for 18 months

20 January 2010

The number of people out of work has fallen for the first time in 18 months, official figures reveal.

There were 2.46 million unemployed people in November, down from 2.49 million the previous month. This puts the unemployment rate at 7.8%, down from 7.9%, according to the Office for National Statistics (ONS). 

Meanwhile, the claimant count fell for the second consecutive month; the figures show there were 1.61 million people claiming Jobseeker’s Allowance in December, down 15,200 from the previous month. This is the largest monthly fall since April 2007 - and far better than the 4,800 drop economists were expecting.

Despite the improved unemployment rate, the ONS figures also show a fall in employment levels. The employment rate between September and November 2009 was 72.4% - the lowest since the winter of 1996/97. The number of people in employment fell by 14,000 on the quarter to reach 28.92 million.

This paradox is partly explained by the rise in part-time workers; while full-time employment fell by 113,000 over the period, the number of people in part-time employment jumped by 99,000 to reach a record high of 7.71 million.

The ONS says there are 1.03 million employees and self-employed people working part-time because they cannot find a full-time job. This is the highest figure since records began in 1992.

Alan Tomlinson, partner at insolvency practitioners Tomlinsons, says the fall in unemployment is "very encouraging". 

But he warns that the UK is not out of the woods yet: "There is more pain in the pipeline in the short term. We were approached by a significant number of businesses in the second half of 2009 and many of these are now terminal. Unemployment could therefore rise again in the months ahead."

And Benjamin Williamson, economist at the Centre for Economic Business Research, points out that while the rise in unemployment during 2009 was less than expected, this is largely down to firms reducing working hours and using pay restraint rather than cutting jobs.

"The low rate of new job creation is likely to keep the labour market subdued for a long time," he adds. "Public sector cuts following the general election could also extend falls in employment into 2010 and 2011, weakening an already fragile recovery."



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