Belfast Telegraph

Saturday 23 August 2014

Unemployment rise 'unsurprising'

The jobless total has risen in each of the last three quarters, figures show

Official figures showing a rise in unemployment and a tightening pay squeeze on working households has cast a cloud over the UK's economic recovery hopes.

The headline jobless total went up for the third quarter in a row, from 15,000 to 2.52 million, from January to March. There was little comfort for those who were in work, with wage growth of just 0.4%, well below the level of consumer price inflation at 2.8%.

A warning from the Bank of England that inflation is likely to peak at 3.2% this summer and remain stubbornly high for some time signalled there was no end in sight to the squeeze.

Prospects of a tentative recovery - after the UK avoided a triple-dip recession and monthly business survey data showed positive signs - could be smothered by the effect of poor pay and unemployment on consumer spending, economists warned.

TUC general secretary Frances O'Grady said: "Those in work are taking a hammering in their pay packets with wage growth down to just 0.4%, while prices rise far more quickly. It's no wonder the economy is struggling when people in work are getting poorer every month."

Mark Hoban, the employment minister, said the Government was "not complacent". He welcomed falls in the number of people claiming jobseeker's allowance and the number of young people out of work. He also pointed to figures showing an increase in job vacancies for February to April 2013, up 40,000 compared with a year earlier to 503,000 and the highest since the end of 2008.

The latest ONS figures showed the number of people in work fell by 43,000 to 29.7 million, the biggest fall since autumn 2011. However, the number of people claiming jobseeker's allowance last month fell by 7,300 to 1.52 million. A total of nine million were classed as economically inactive - including students, people on long-term sick leave and those who had given up looking for work. It was a rise of 47,000.

Neil Carberry, director of employment and skills for the CBI, said the rise in the jobless total was "unsurprising" given the "challenging economic conditions" at the end of last year. But he said the high number of vacancies showed businesses had a "more positive view of the year ahead".

However, Howard Archer, UK economist at IHS Global Insight, said: "A serious concern for growth prospects is that consumer spending will be held back by low earnings and softer employment."

Liam Byrne, Labour's shadow work and pensions secretary, said: "We now have definitive proof the Government has simply failed to get Britain back to work."

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