Long-term unemployment worsens

17 March 2010

The number of people out of work has fallen, but there has been a increase in the number of people unemployed for more than a year. 
Unemployment levels in the UK are continuing to fall with fewer people claiming jobseeker’s allowance, official figure show. The number of people out of work fell by 33,000 to 2.45 million in the three months to January – the lowest for almost a year. This left the jobless rate unchanged at 7.8%.
Meanwhile, the number of people claiming unemployment benefit in the UK fell by its largest amount since November 1997 in February.

Figures from the Office for National Statistics showed a drop of 32,300 to 1.59 million last month with January’s 23,500 figure chopped to 5,300. Economists had pencilled in a rise of 8,000 for February.

However, the positives were offset by a fall in employment down by 54,000 in the three months to January to stand at a four-year low of 38.86 million. As a result, the employment rate fell to a 13-year low of 72.2%.

Economists say this indicates that the number of unemployed has been limited by people withdrawing from the labour market for the time being.

Meanwhile the number of people out of work for more than a year climbed to 61,000 to 687,000.

Howard Archer, chief UK economist at IHS Global Insight says it is too soon to sound the all-clear on the jobs front.

“We suspect the labour market may well be somewhat erratic in the near term at least, with some months of unemployment gains and some of losses," he warns. “There remains the risk that unless the economy gains significant momentum in the near term, a significant number of firms may well decide that they really cannot hold on to some of their workers any longer."

Archer also warns that significant job cuts in the public sector could well start later this year as part of the efforts to rein in government expenditure.

Brian Johnson, an insolvency practitioner at HW Fisher Chartered Accountants, says the drop off in unemployment does not reflect the "extremely challenging conditions" businesses are still facing.

"Nobody wants to talk the economy down but it's as if we're in a false economy where the statistics do not correlate with the reality," he says.  "Because of this these latest figures provide a sense of unease.

"There's a feeling that this could be the calm before the storm, which will start in earnest in the second half of the year. The exit from recession is likely to be longer and more painful than the recession itself."



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