Unemployment rises to 2.5 million – a 17-year high

Unemployment has risen to 2.53 million, the highest it has been since 1994, with the rate of youth unemployment soaring to a 20-year peak.

According to the Office for National Statistics, the number of those out of work in the three months ending in January is 8 per cent of the workforce, which is up 37,000 on the figure for December. About 1.45 million people claim jobseeker's allowance.

The figures corroborate other evidence that suggests the recovery has been slowing in recent weeks. Female unemployment, at just over one million, is at it highest since 1988

David Cameron described youth unemployment as "disappointing, once again", adding that it is a "very mixed picture".

Ministers are keen to highlight the expansion in private-sector employment over the past year – up 428,000, more than offsetting a loss of 132,000 public-sector jobs, in line with the Coalition's aim of "rebalancing" the economy.

But the majority of those new jobs are part-time – 206,000 against 90,000 new full-time positions. Thus relatively well-paid public-sector posts, disproportionately held by women, are being displaced by less-rewarding work in the private sector.

Youth unemployment is 37.7 per cent among 16 to 17-year-olds, and for 18 to 24-year-olds it is 18.3 per cent. The Work and Pensions Secretary Iain Duncan Smith has written to the Office for National Statistics complaining that the numbers do not take into account those in full-time education – as many are also looking for work. But most observers agree that the jump in youth unemployment since 2008 remains driven by recession.

One factor may be that record numbers of older people are working beyond retirement age due to harder times and thus "bed blocking" jobs for the young. The ONS points to a rise of 200,000 in the number of over 65-year-olds in work since 2009, and a rise of 130,000 since last year – bringing the total to 900,000. Shrinking retirement pots, low interest on savings, the rise in the pension age for women, better health and the poor economic background seem to have kept them at work for longer. About 33,000 women could face an increase of two years in state pension age.

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