Olympics spurs on jobs market but fears remain

There was some respite for the Government yesterday as figures showed that thousands were taken off dole queues across the country thanks to the Olympics.

Employment figures showed yet another boost for London from the Games, with 91,000 extra people in jobs. But experts warned that unemployment could begin to rise in coming months.

The picture across much of the UK remained gloomy, with long-term unemployment hitting a 16-year high. The number of people out of work for more than a year reached 904,000 between May and June, up 22,000 on the previous quarter and the highest figure since May 1996.

Despite a fall of 7,000 in unemployment nationally to 2.59 million, the jobless count is still 61,000 higher than a year ago. In the capital unemployment fell by 22,000 in the quarter to July, according to the figures released by the Office for National Statistics.

Capital Economics economist Samuel Tombs warned: "The recent weakness of many of the employment surveys suggests that some of these workers will struggle to find work now that the Games have finished."

Across the country there was a fall of 15,000 in dole claimants during August and a rise of 236,000 in employment over the past three months – but the number of part-time workers hit a new record high of 8.12 million.

The number of Britons working part time because they could not find a full-time job also hit a record high, of 1.42 million.

Work and Pensions minister Mark Hoban said: "These are very encouraging figures – since May 2010, we've seen an increase in private-sector jobs of a million, which is a good performance. But there's also some challenges."

John Walker, the chairman of the Federation of Small Businesses, said the continuing fall in unemployment was good news but more people need to find full-time work.

Unison general secretary Dave Prentis said the Government needed a long-term plan of job creation to ease the UK's economic woes.