David Prosser: The toughest test: how to get Britain back to work

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The Independent Online

Outlook Something for almost everyone then in the latest unemployment statistics. If you want to kick out Labour, the killer stat is 8 per cent – the current rate of unemployment, the highest for 16 years. Not impressed with Team Dave or the boy wonder Clegg? Then last month's 33,000 fall in the number of people claiming jobseekers' allowance – the fourth such drop in the past five months – might be a figure more to your liking.

The joblessness waters, in other words, are very muddy. It does seem clear that unemployment has risen far less dramatically than we might have expected given the duration and depth of the recession. But it is far from certain that we have turned the corner on jobs.

The all-time high in the number of people now classed as economically inactive – out of work but not seeking employment – is particularly worrying. More than 110,000 people have joined this classification in the past three months, many of them choosing options such as education because employment is not available. These people will have to be accommodated by the labour market eventually.

We should also be concerned about the sharp increase in the number of people who have been out of work for more than a year. We know that the 800,000 who fall into this category will find it that much harder to get work.

Britain's much-vaunted flexible labour market of the past two years (workers opting to take part-time work or pay cuts, for example, rather than lose their jobs) has reaped benefits. Our 8 per cent unemployment rate compares to 9.7 per cent in the US and 10 per cent in the eurozone.

But flexibility does not create new jobs: only economic growth can do that. Will the growth that Britain is heading for this year and next – note that yesterday's projections from the International Monetary Fund undershoot those made by the Treasury – produce enough additional employment to counter the inevitable job losses coming in the public sector? It is difficult to be confident about that.

Labour says unemployment could have been much higher without its policy response to the downturn. Whether you accept this is, in part, a political judgement. But remember that following previous recessions, it has often taken the best part of a year for unemployment to begin falling steadily, and on those occasions the governments of the day were not trying to cope with record levels of public debt.

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