Unemployment hits new high of 8.4 per cent

Unemployment rose by 48,000 in the three months to December, bringing the total number of jobless people to 2.67 million.

Figures from the Office for National Statistics revealed this morning that the unemployment rate rose to 8.4 per cent, a rise of 0.1 percentage points on the previous quarter. This figure has not been higher since 1995.

The ‘inactivity rate’ for those aged 16-64 was 23.1 per cent, as there were 9.29 million economy inactive people in this age group. This was a slight fall from the previous rate of 23.3 per cent.

However, the ‘claimant count’ - the number of people claiming Jobseeker's Allowance last month - was up by 6,900 to 1.6 million.

CIPD chief economic adviser John Philpott said that the headline jobs figure was “considerably better” than expected, but that the picture it presented was nevertheless that of a labour market in the doldrums, neither contracting dramatically nor recovering.

“As the CIPD has noted in recent months the UK jobs market is experiencing a slow, painful contraction that will see unemployment crawl toward close to 3 million by the end of 2012, rather than a sudden surge of joblessness,” said Philpott.

“Though very welcome, a relatively small rise in unemployment and an increase in part-time jobs, combined with below inflation average pay rises will do little to instil a feel good factor in the UK workforce. Indeed, most of the rise in employment seems to be among underemployed ‘reluctant part-timers’ who can’t secure the full-time jobs and incomes they seek. There is little to suggest this situation will improve any time soon unless economic growth and labour demand greatly exceed most current forecasts.”

The institute predicted this week that more private sector employers would make staff redundancies in the first quarter of 2012. Nearly a third (31 per cent) of private sector employers plan to make redundancies this quarter, up from 24 per cent in the previous quarter, found the institute’s Labour Market Outlook (LMO) survey of 1,000 employers for winter 2011/12. The CIPD has forecast that unemployment will rise to 2.85 million by the end of the year. 

Kevin Green, chief executive of the Recruitment & Employment Confederation, said that the REC's analysis of the number of job vacancies showed some grounds for optimism.

"The feedback from recruitment professionals confirms that demand is increasing in some sectors,” said Green. “The fact that the number of job vacancies has risen to 476,000 confirms an urgent need to address the disconnect that currently exists between what employers are looking for and what jobseekers have to offer.”

Meanwhile, the statistics showed that workers’ pay rose by 2 per cent in the last 12 months, almost unchanged from previous figures. Earnings are still trailing the rate of inflation; yesterday CPI inflation was revealed to have dropped to 3.6 per cent and RPI to 3.9 per cent.