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  1. Business
  2. Economics
14 September 2011

What do the unemployment figures actually show?

There was no good news in today's figures -- and this is just the beginning.

By David Blanchflower

The awful unemployment numbers today came as no surprise to those of us who have been arguing these many months that George Osborne’s economic strategy is disastrous for the British economy. There was never the slightest prospect of a expansionary fiscal contraction in the depths of a once-in-a-century financial crisis.

This is all likely to get a lot worse over the next few months. Unemployment rising, the number of jobs and total hours falling and rising unemployment durations. There was no good news.

David Cameron, master of understatement, admitted at PMQs today, at which he took a batterring over the economy, that the numbers were “disappointing”. Indeed, Labour today accused Cameron of “bluster, evasion and untruths” in his attempt to defend what they called his “failing economic record”. Liam Byrne, Labour’s shadow work and pensions secretary, said:

David Cameron’s complacency today was simply breathtaking. And, under pressure to explain why unemployment is rising and the economy flatlining, he once again resorted to bluster and evasion and got his figures badly wrong.

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So what did the ONS data release actually show, rather than what the Prime Minister wished they showed?

1. An increase in ILO unemployment of 80,000 on the rolling May-July quarter, going over the 2.5 million mark. The unemployment rate remains at 7.9 per cent.

2. The more timely claimant count for August increased by 20,000.

3. There was a growth of 29,000 of discouraged workers, who were out of the labour force but reported that they wanted a job

4. Employment fell by 69,000 on the quarter but was up 24,000 on the year. Workforce jobs were down 100,000 on the quarter and down 41,000 on the year.

5. Public-sector jobs fell 111,000 on the quarter and 240,000 on the year, contrary to what Cameron falsely claimed at PMQs today. Private-sector jobs were up 41,000 on the quarter and 264, 000 on the year. This is approximately half the 500,000 jobs that Osborne recently claimed had been created under his watch. It is becoming clear, as we get more data, that most of the jobs created were under Darling’s watch.

These numbers are set to worsen further and as each month goes by, it will become increasingly obvious that private-sector job creation is slowing fast. Time to own these numbers, George. Your policy is failing fast.

6. Hours picked up a little, but as I suggested in an earlier blog, the decline observed over the past couple of months was not just because of bank holidays, as David Smith recently claimed on his blog. Total hours were 914.3 million on the quarter, down from 921.3 million in May-July 2010 when the coalition took office.

7. Youth unemployment rose by 78,000 on the quarter to 973,000. Especially worrying was the rise of 35,000 of 18-to-24-year-olds on the quarter who had been unemployed for 12 months or more. The number of 18-to-24-year-olds on the claimant count for at least 12 months was also up on the month. Long duration unemployment is especially bad and shamefully, the government seems to have no policy to deal with this growing problem.

8. Wage pressure remains benign. Regular pay rose by 1.7 per cent on the month so, with inflation at 4.5 per cent, driven primarily by Osborne’s VAT increase, most workers are having real pay cuts.

9. Scotland was the only region that saw falling unemployment on the quarter.

This is just the start of a flood of dreadful economic news that is expected to hit us over the next couple of months. The coalition government’s economic strategy is in tatters.

Ed Balls and Ed Milband are going to have a field day with Natalie Rowe’s — aka Mistress Pain — claims of Osborne’s cocaine use and his interest in her work as a dominatrix. Talk of paddles, whips, chains and handcuffs are certainly not going to do much for his credibility, which is already in tatters as the economy tanks. Osborne’s sneering is going to come back to haunt him. The Labour leader today suggested at PMQs that the Chancellor had “lashed himself to the mast. Not for the first time perhaps!”

Sadly, the coalition appears to believe that unemployment is a price worth paying. I suspect that the British people will have something to say about that.

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