Jobless toll hits 7-year high after influx of migrants

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Unemployment has hit a seven-year high, helping to depress wage inflation but raising concerns over the impact migrant workers are having on the labour market, official figures showed yesterday.

The official jobless measure broke through 1.7 million in August for the first time since the summer of 1999, the Office for National Statistics said. It has risen by 19.3 per cent over the past year.

The more up-to-date claimant count, which measures the number of people claiming unemployment benefit, jumped by 10,200 in September to a five-year high of 962,000.

However, the total number of people in work hit a fresh all-time record of 31.06 million. The increase of 255,000 in the number of people in work over the past year was in stark contrast to the 276,000 who have joined the ranks of the unemployed.

The ONS said it was impossible to identify the exact reason for the divergent trends, but indicated it was due to a combination of new migrant workers and Britons returning to work, either coming out of retirement or after bringing up children

Research by academics at University College London published this month showed last year saw the largest ever influx of foreign workers. They estimated the 400,000 increase took the total to 1.5 million or 5.4 per cent of the employed population.

Yesterday's figures showed that with the inflow of migrant labour concentrated among people aged under 35 - around four out of five are in that age group - the rise in unemployment was also greatest among younger workers.

Michael Saunders, a senior economist at Citigroup, pointed out that the jobless rate for people aged between 18 and 24 had reached 12.7 per cent, the highest since late 1997 and up from 10.9 per cent a year ago. "And, to be clear, in the main it is not the migrants who are out of work," he said.

The issue came to a head last month when business groups lobbied the Government to restrict the rights of workers from Bulgaria and Romania to enter the UK when the two states join the European Union in 2007.

The Department for Work and Pensions played down the fears, saying the accession of eight countries including Poland in 2004 had been handled successfully. "It has been a broadly positive experience in terms of migrant labour plugging gaps in the jobs market that could not otherwise be filled without any detrimental impact on indigenous people," a spokesman said.

Julien Garran, head of asset allocation at Legal & General, said the importance of the growing number of older workers was often overlooked. Yesterday's figures showed that the number of economically inactive people, such as the retired, homecarers and long-term sick, has fallen by 161,000 over the past year, of whom more than a third were among the 50-to-64 age group.

Economists said the growth in labour supply was containing wage inflation. ONS figures showed average earnings rose at an annual rate of 4.2 per cent in the three months to August, down from 4.4 per cent in the three months to July.

Excluding bonuses, average earnings growth eased to 3.6 per cent in the three months to August from 3.7 per cent - the lowest rate since January 2004.

London becomes UK's unemployment blackspot

Forget the gleaming office blocks, packed West End bars and soaring house prices - London is officially the unemployment blackspot of Britain.

One in 12 Londoners is out of a job and looking for work, according to the latest official figures published yesterday. The unemployment rate of 8.2 per cent - its highest in eight years - casts it adrift from the next highest region, the North-east on 6.7 per cent. It is more than double the 3.4 per cent in the South-west, the area with the best record, and above the national average of 5.5 per cent. The jobless rate has risen by 1.5 percentage points or 77,000 people over the past year.London also has the lowest employment rate of any region in Britain at 69.8 per cent, against the national average of 74.6 per cent.

An unemployment map shows the capital like a doughnut - a ring of modest rates of joblessness encircling boroughs with soaraway unemployment. Tower Hamlets, the borough that includes the job-rich financial district of Canary Wharf, tops the table at 11.3 per cent with neighbouring Hackney on 10.5 per cent.

Leafy Richmond-upon-Thames is the lowest, on 4.1 per cent.

Philip Thornton