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Fall in UK unemployment

With unemployment popularly expected to peak above three million, most commentators were surprised by one measure of unemployment showing a tiny fall over the three months to the end of August. In fact, according to the Office for National Statistics, there were 2.469m unemployed between June and August, which was slightly fewer than the 2.47m recorded between May and July. We have not seen a fall in unemployment since the March to May quarter in 2008.


However, when the last quarter is compared to the previous quarter, there was a rise of 88,000 which reflects a total rise in unemployment of 677,000 over the past year. However, the rate of increase in unemployment is obviously slowing. The unemployment rate was 7.9% for the three months to August 2009 which is up 0.3 over the previous quarter and up 2.1 over the year. Again, these figures are on a three-month average. When detailed monthly estimates are examined it suggests that the unemployment rate fell from 8.2% in June to 7.8% in August. The UK’s official rate of 7.9% is well below the 9.8% in the US and the 9.1% average in the EU.

Unemployment is not exactly back on track but appears to be heading in the right direction.

Unemployment is not exactly back on track but appears to be heading in the right direction.


As far as the claimant count is concerned, which measures the number of people claiming Jobseeker’s Allowance, this reached 1.63m in September 2009. This is the highest figure since April 1997. But, this figure only rose by 20,800 over the previous month, which whilst bad news for those affected, again shows a downward trend.


Other figures show that the employment rate for people of working age was 72.6% for the three months to August 2009, which is down 0.3 from the previous quarter and 1.8 over the year. There was, however, a fall in redundancies over the quarter of 68,000 to 233,000, although this figure was still 85,000 up over the year.


Average earnings, excluding bonuses, increased by 1.9% in the three months to August 2009 compared with the previous year, which is the lowest annual growth rate since comparable records began in 2001. This should help to dampen inflation.


What is particularly worrying about the current situation is that there was a further rise in youth unemployment, from 937,000 to 946,000. This means that 20% of young people between the ages of 16 and 24 are out of work and this rises to one in three for 16-17 year olds.


Although the overall trend in UK unemployment is going in the right direction the overall total does hide some changes in the labour market. For example, there are almost one million people working on a part-time basis – and, therefore ‘employed’ – who are actually looking for full-time work. Also, there are another 443,000 people who are working on ‘temporary’ jobs. On the other hand, it could be argued that this shows signs of the flexibility within the UK labour market which many other countries do not have.


This could be the reason that Yvette Cooper, work and pensions secretary was able to tell the House of Commons work and pensions committee that: “It may be that the traditional large gap between what happens to growth and what happens to employment may be narrowing.”



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Posted in Employment, unemployment

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