Challenge for coalition as jobless total tops 2.5m

The new Government was facing a growing crisis over jobs tonight after unemployment soared above 2.5 million for the first time since 1994, the number of youngsters out of work reached a near 20-year high and the employment rate slumped.

Unions and business leaders said the "dire" news showed the scale of the problem facing new ministers, who had inherited a "fragile" labour market.

The figures were published hours before the appointment of the new Work and Pensions Secretary, Iain Duncan Smith, whose top priority will be to stem the rising tide of jobless.

The number of people looking for work rose by 53,000 in the quarter to March to 2.51 million, while the UK's employment rate slumped to 72%, the lowest since 1996.

The Office for National Statistics also reported that the number of people classed as economically inactive reached a record high of 8.17 million.

The total, which includes students, people looking after a sick relative or those who have given up looking for work, increased by 88,000 in the latest quarter and is now the worst since records began in 1971.

Youth unemployment has also increased, with the number of 16 to 24-year-olds out of work up by 18,000 to 941,000, the joint highest since records began in 1992.

The number of people in work fell by 76,000 to 28.83 million following a reduction of 103,000 in full-time workers, compared with a rise of 27,000 part-timers.

Job vacancies fell by 6,000 to 475,000, the first quarterly fall since last autumn.

The only bright spot in today's grim figures was another fall in the number of people claiming JobSeeker's Allowance, down by 27,100 last month to 1.52 million, the lowest level for a year.

The so-called claimant count has now fallen for three months in a row and in five out of the last six months.

Long-term unemployment, counting those out of work for more than a year, increased by 94,000 to 757,000, the highest figure since 1997.

TUC general secretary Brendan Barber said: "While it failed to feature much in the election campaign, today's rise shows that unemployment remains a pressing social and economic problem, particularly among young people."

John Cridland, deputy director-general of the CBI, said: "These jobs figures show how fragile the recovery is, and we expect tough labour market conditions to continue for some time. It is notable that those working part-time because they cannot get a full-time job is over one million."

Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said: "If David Cameron's incoming coalition Government wanted reminding about the economic policy challenge that lies ahead, Conservative and Liberal Democrat ministers need look no further than today's dire official jobs figures.

"Higher unemployment, including more unemployed young people, fewer people in work, especially full-time work, an increase in redundancies, a fall in job vacancies and especially a record number of economically inactive people sends out a clear SOS message on the state of the UK labour market."

A spokesman for youth charity The Prince's Trust said: "One in five young people are still out of work. These figures remind us of the vital need to support young people into jobs and training before the unemployed become the unemployable."