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Unemployment Fears

16:37 Mon 24th May 2010 |

Unemployment as a whole has seen a turn for the worst in recent months; however unemployment among young people has been especially acute, as firms cut jobs to reduce costs in the downturn.

Fear of unemployment:

Worries surrounding unemployment stem from statistics, which show that the jobless rate increased to a shocking 7.6%, the highest in more than 10 years.

The number of people claiming unemployment benefit increased by 23,800 in June to 1.56 million, which was less than analysts had forecast. As such signs are emerging that the surge in unemployment so far this year might finally be starting to ease, but wage growth slowed to its lowest on record, something analysts warned could hamper the recovery.

The Office for National Statistics said the broadest measure of unemployment showed joblessness at 2.47 million in the three months to August, up 88,000 from the previous three months but a similar level to that it reported for July and one which left the jobless rate steady at 7.9%.

Youth unemployment also defied expectations that it would jump through the one million mark, remaining at 946,000, though that still means one in five of 16-24 year olds are without a job. It's particularly worrying that over half a million unemployed people have been out of work for at least a year, including 133,000 young unemployed people. Also with a new generation of school and college leavers starting to look for work, the unemployment crisis will get even bigger.

The crisis continues:

Even though economic conditions may be stabilising, economists expect unemployment to continue rising as financial uncertainty persists.

Not only is unemployment rising, figures show that the number of jobs available has also fallen. The number of vacancies dropped to a record low of 429,000 in the three months to June, down by 35,000 from the previous quarter.

Unemployment has huge risks on the economy, and it has been said that the natural rate of unemployment may rise above previous levels. Natural rate of unemployment is the rate at which it neither creates acceleration of deceleration in inflation. The previous high for "natural employment" was 5.5%. Now, in current conditions it may rise to 6.5% of even 7%.

The latest labour market figures confirm that the biggest losers from the recession in employment terms have been men, full-time employees, people at both ends of the age spectrum, skilled blue collar workers and unskilled workers, UK born workers, and private sector workers. Middle ranking private sector employees, especially those lucky enough to keep hold of their jobs in manufacturing, have in most cases also suffered significant loss of hours and earnings.

With the recession in full swing, and the economy being hit hard by the continuous effects there are still predictions that if may get worse, however there are a number of signs that unemployment figures will start to increase in the near future.

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