Unemployment among young workers hits 15 per cent

By Sean O'Grady, Economics Editor

Embarrassment for Brown as new figures set to show jobless total has hit 2 million

March 16, 2009

Unemployment will rise this week to beyond the two-million mark – and higher than the level that New Labour inherited from the Conservatives when Tony Blair became Prime Minister and Gordon Brown Chancellor in May 1997. The jobless total, when it is released on Wednesday, will easily exceed the last recorded figure of 1.971 million, and may well be larger than the 2.05 million people unemployed that was bequeathed by John Major over a decade ago.

In recent months, the headline rate of unemployment has risen by about 40,000 to 60,000 per month. Many economists expect unemployment to carry on climbing steeply, and to exceed the post-Second World War peak of 3.3 million seen in 1984, during Margaret Thatcher's premiership.

The workforce is larger now, so the unemployment rate, expressed as a percentage, may remain below that 1980s highpoint. And the number of benefit claimants is substantially lower than one decade ago. But the headline figure will still evoke memories of the mass unemployment suffered in the 1980s and even the 1930s. By this time next year, more than one in 10 of the labour force could be out of work.

The most acute concern for ministers will be the sharply deteriorating outlook for younger workers. Unemployment among 16-to-24-year-olds is running at more than 15 per cent.

Despite a succession of government schemes to place them in work, the level of British youth unemployment has remained stubbornly high. Some 488,000 of 18-to-24-year-olds were unemployed in May 1997, a figure which declined to a low of 371,000 in July 2000. However the latest figure puts it back up at 616,000, and many economists point out that the young will suffer disproportionately from the wave of sackings sweeping the economy. Younger workers tend to fall victim to a "last in first out" mentality, but tend to have little money to fall back on.

Howard Archer, of economic consultancy Global Insight, said: "We expect unemployment to have risen by around 176,000, taking it up to 2.040 million and the unemployment rate to jump to 6.6 per cent. We also expect unemployment to rise to a peak of 3.3 million around late-2010 and early-2011. This would give an unemployment rate of around 10.5 per cent."

The Chartered Institute of Personnel and Development forecasts that redundancies will reach 300,000 over the first quarter of this year.

For Mr Brown's government to preside over levels of unemployment even higher than those during the Thatcher and Major governments will be embarrassing to the Prime Minister, who made much of his early political reputation by passionately campaigning on this very issue. In 1983, in his maiden speech to the House of Commons, Mr Brown declared that "the grossest affront to human dignity and the gravest assault, on any view of social justice, is mass unemployment and its inevitable consequence, mass poverty." As Chancellor from 1997, Mr Brown told MPs: "The greatest waste of our economic potential and the most serious cause of poverty is unemployment."

Perry Ward: 'I've now used up all my savings'

I am a junior programmer but I have been unemployed for seven months. After graduating with a degree in physics from the University of Exeter I moved back in with my parents and helped them renovate their house so that I could save some money.

In 2007, I got a job as a junior technical adviser. It started off as a contract position then became permanent but last summer the company folded and I lost my job. I got another job through an agency but after just two months the company had to let me go as the recession was hitting them really hard.

I have applied for lots of jobs but have only had two interviews since September. The situation is pretty bad. People with more than five years' experience are going for junior jobs with £20,000 salaries, taking big pay cuts. And so many graduates are out there looking for jobs that the competition is fierce.

The lease on my Oxford flat does not expire until July and I don't want to leave but a lot of people are moving towns in search of work. I consider myself a young professional and I can't really hand in my CV to Tesco as I wouldn't be the person they are looking to hire long term anyway.

I have used up all my savings and am on unemployment benefits. It's getting harder to pay the rent. If I run out of money I will have to move back home and help the parents build a garage.

Interview by Stina Backer