Unemployment leaps to 14-year high

The number of jobless young people neared one million today after unemployment soared to a new 14-year high of 2.43 million in the three months to June.

Another 220,000 people fell victim to the recession in the quarter to leave a total of 2,434,879, with the rate of unemployment hitting 7.8 per cent - the highest since the end of 1996.

Youth unemployment rose again, with a further 53,000 16 to 24-year-olds unemployed between April and June, taking the total figure to 928,000 according to the Office for National Statistics (ONS).

Youth charity The Prince's Trust warned of the start of a "long and downward spiral" for a generation of young people left bearing the brunt of recession.

It is expected that unemployment will rise above three million next year, despite recent encouraging signs on the economy. The number of jobless lags behind the wider economy and is therefore likely to continue rising for some time.

TUC general secretary Brendan Barber said the figures showed an economic recovery was a long way off.

He added: "With over one in six young people out of work, unemployment is already at crisis level.

"The Government must do more to get people back into work, otherwise we risk losing another generation of young people to mass unemployment.

Dave Prentis, general secretary of public sector trade union Unison, added that apprenticeships and other on-the-job training schemes will be crucial to giving young people hope.

He said: "The Government has come up with plans to help under 25's find work in the public sector. It is now time for company chiefs to see what they can do to create real jobs and give people hope for the future."

Today's data revealed the number of people in the UK claiming jobseeker's allowance increased by 24,900 in July to 1.58 million, marking the 17th month of rising claimants in a row and the worst level for 12 years.

Those out of work for longer than a year also remained at an 11-year high with a 36,000 rise to 543,000 in the three months to June.

But the hike in the so-called claimant count was lower than the 28,000 experts had forecast.

Investec economist Philip Shaw said: "We're not overly optimistic, but there's a chance the unemployment rate is rising more slowly than previously."

And while the leap in the number of unemployed remained firmly above 200,000, it was far less than the 281,000 rise seen in the three months to May.

JP Morgan economist Allan Monks said there were signs the "worst is already past", but said firms may be avoiding job cuts by slashing wages.

The ONS data showed average earnings including bonuses increased by 2.5 per cent in the year to June, up 0.2 per cent from the three months to May, but with bonuses stripped out, the figure is the lowest since records began in 2001.

"This sharp adjustment on the wage side of the labour market is limiting the pace of overall job shedding," said Mr Monks.

The ONS figures on those in work also make for grim reading, with the number of people in work down by 271,000 between April and June to 28.9 million after a fall of 0.9 per cent in the employment rate to 72.7 per cent.

Vacancies fell to a record low of 427,000 in the three months to July, down by 26,000 on the previous quarter and 203,000 on a year ago.

Manufacturing jobs fell again, by 212,000 year-on-year to 2.66 million in the three months to June, which remained at the lowest since records began in 1978.

The number of people classed as economically inactive, including those on long-term sick leave or who have given up looking for a job, increased by 127,000 in the latest quarter to 7.95 million.

There are now 1.49 million unemployed men in the UK and 942,000 women without jobs, said the ONS.

Business Secretary Lord Mandelson was asked on BBC News whether he felt the Government had let people down with unemployment figures still rising.

The minister said the Government had made a "very bold and decisive response" to the international financial crisis.

"Because if we hadn't intervened in the way that we did with the Bank of England, very many more businesses would have gone to the wall and the levels of unemployment would have been very, very, very much higher than they have been.

"But even so, these levels are unacceptable. Which is why we are going to maintain our measures to help businesses, but also to help those directly who through no fault of their own are finding themselves without work."

Shadow work and pensions minister Mark Harper said unemployment was "fast becoming the most pressing social, economic and political problem plaguing Britain".

And Liberal Democrat work and pensions spokesman Steve Webb said rhetoric about getting people back to work would feel like "cold comfort".

"The widening gap between the number of unemployed people and the number of people claiming benefits shows vulnerable people aren't getting the help they need," he added.

Unemployment in the regions between March and May was:

North East 120,000 plus 15,000 9.8 per cent

North West 290,000 plus 19,000 8.5 per cent

Yorkshire/Humber 233,000 plus 24,000 8.8 per cent

East Midlands 170,000 plus 6,000 7.3 per cent

West Midlands 285,000 plus 39,000 10.6 per cent

East 194,000 plus 16,000 6.5 per cent

London 359,000 plus 27,000 8.9 per cent

South East 263,000 plus 26,000 5.9 per cent

South West 172,000 plus 15,000 6.4 per cent

Wales 108,000 minus 2,000 7.6 per cent

Scotland 188,000 plus 31,000 7 per cent

N Ireland 54,000 plus 5,000 6.7 per cent