A fifth of 18 to 24 year olds now unemployed

11 November 2009 | By Robert Thickett

The number of unemployed rose by 30,000 between July and September to reach 2.46 million, but this was the smallest quarterly increases in unemployment since March-May 2008. The number of people unemployed for up to six months fell by 99,000 on the quarter to reach 1.31 million.

Full-time employment fell by 80,000, to reach 21.26 million, while part-time employment increased by 86,000 to reach a record high of 7.66 million.

There were 997,000 employees and self-employed people working part-time because they did not find a full-time job. This is the highest figure since records for this series began in 1992 and is up 30,000 on the previous quarter.

Average earnings, excluding bonuses, for July to September 2009 were 1.8% higher than a year previously. This is the lowest annual growth rate since records for this series began in 2001.

The annual growth rate, excluding bonuses, for the public sector was 2.8%, while the corresponding figure for the private sector was 1.5%.

Steve Webb, shadow work and pensions secretary for the Liberal Democrats, says: ““It is a national disgrace that one in five 16 to 24 year-olds are now unemployed. As a society we cannot afford to write off a whole generation in this way.

“For months young people have heard promises from the Government of jobs that will not materialise until next year at the earliest which will be too late.

“The Government must immediately invest in creating internships and training for young people to improve their chances of getting a job.”

Arek Ohanissian, economist at the Centre for Economics and Business Research, says that the dramatic fall in the growth rates for average earnings, both including and excluding bonuses, indicates how much more wage growth is being pushed down during this recession than in previous cases.

He attributes the lower than expected rises in unemployment to be a direct result of firms using the price as opposed to the quantity of labour to adjust costs. And he says this may have fed through to GDP for Q3, with the government’s first estimate lower than it actually was.

He says: “The lower than expected rise in unemployment over Q3 in general suggests that output may not have fallen as much as recently reported by the ONS in its first estimate of gross domestic product.

“Indeed, we are expecting the estimate Q3 to be revised upwards followed by positive growth in Q4.”

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