‘Worse to come’ on unemployment

The Institute for Public Policy Research (IPPR) said that although the jobless figures due to be released on Wednesday were likely to drop, prospects were bleak for 2013.

IPPR analysis of forecasts produced by the Government’s Office for Budget Responsibility show unemployment will not peak until 2014, and might not get back to current levels until the end of 2015.

The figures claim 86,000 extra young people aged under 25 could join those already unemployed next year, and that long-term unemployment could rise by 32,000 to a total of 926,000.

It is also predicted an extra 47,000 people aged over 50 could join the jobless register.

IPPR researcher Spencer Thompson said: “While unemployment has been falling over recent months, the latest forecast from the OBR suggests that worse is to come.

“With the economy predicted to return to negative growth, the forecast for unemployment is bad news too. The outlook is especially bleak for young people and the long-term unemployed.

“Hundreds of thousands are at risk of permanent ‘scarring’ in the labour market, having their long-term outlook damaged by long periods of unemployment or by a difficult and patchy entry into the world of work.

“The Government should guarantee a job, paid at the minimum wage or above, to anyone who has been out of work and claiming jobseekers’ allowance (JSA) for more than 12 consecutive months.

“If people do not want to take up this offer, they should be expected to find an alternative that does not involve claiming JSA.”

The IPPR’s assessment was supported by leading economist Dr John Philpott who said the “work shortage” rate was 23.2 per cent, three times higher than the headline unemployment figure.

His total of almost eight million includes the country’s 2.5 million official unemployed, plus three million under-employed and 2.3 million economically inactive.

Dr Philpott, director of The Jobs Economist, said: “Unemployment has not reached the levels feared at the start of the financial crisis but it’s totally wrong to conclude that the labour market has got off lightly.

“On the contrary, the degree of pain inflicted on the labour market has been as severe as expected it’s just that the pain has been diffused differently than in previous recessions.”

A more positive note was sounded by figures released by the Recruitment and Employment Confederation (REC) which is the professional body for the recruitment industry.

Its Northern Report on Jobs study, carried out in partnership with KPMG, shows a “sharp expansion in permanent staff placements” in northern England.

Chris Hearld, KPMG’s Leeds office senior partner, comments: “This last Northern Report on Jobs of 2012 delivers some pre Christmas cheer regarding employment, as business across the region gradually gain confidence.

“In fact the North has led the nationwide jobs market improvement, with the country’s most marked pace of increase in availability of permanent employment.

“But before anyone gets the bunting out the good news must be seen in the context of a fragile economy that remains susceptible to future shocks.

“Recovery is by no means certain and we need a few more months like this to suggest emerging trends are translating into a sustained period of growth in employment.”