Job figures are horrendous but hardly a surprise

This was always an ideological attack on the state and the young are going to have to pay.

By David Blanchflower Published 12 October 2011 16:28

The ONS data release on the labour market this morning was horrendous. Unemployment jumped to 8.1 per cent, up 0.4 per cent on the quarter. The total number of unemployed hit 2.57 million, which is the largest quarterly increase since the three months to July 2009. Nearly 900,000 have been unemployed for at least a year and 425,000 for at least two years. The unemployment rate is now in double digits in the north east (11.3 per cent) and in London (10 per cent).

The number of people in employment aged 16 and over fell by 178,000 on the quarter and by 47,000 on the year to reach 29.10 million. This is the largest quarterly fall in the number of people in employment since the three months to July 2009.

The number of people working part-time fell by 175,000 over the quarter to reach 7.78 million. This is the largest quarterly fall in the number of part-time workers since comparable records began in 1992. Inactivity was also up and wage growth remains benign.

Most worrying was the rise in youth unemployment, which is now at 991,000. Next month, it surely will hit the million mark, as the cohort who left schools, colleges and universities fail to find jobs. Plus, of the 17,000 increase in the claimant count, 9,900 was among 18-to-24-year-olds.

The youth unemployment rate was 21.3 per cent over the three months between June and August 2011, an increase of 1.6 per cent on the previous quarter. Worst of all, a quarter of a million youngsters under the age of 25 have been unemployed for at least a year. Long spells of unemployment while young can create permanent scars.

The rise in youth unemployment is hardly a surprise, given the government abolished the Future Jobs Fund and the Educational Maintenance Allowance and reduced the number of university places. This coalition appears to be dead set on creating a lost generation. I first started warning that this was coming in 2009 and the Labour government responded and successfully got youth unemployment down, so the blame for the rise rests entirely at the coalition's door.

Interestingly, the ONS also reports an alternative measure of youth unemployment. This measure, which was introduced in its April 2011 data release, measures the youth unemployment rate "excluding people in full-time education". According to this measure, there were 721,000 unemployed 16-to-24-year-olds between June and August 2011.

This alternative measure of youth unemployment was introduced by ONS back in Spring 2011 in response to pressure from the Secretary of State for Work and Pensions, Iain Duncan Smith, who argued that this was the most appropriate measure to focus on. Youth unemployment among 16-to-24-year-olds increased by 74,000; the number of unemployed who were not in full-time education increased by 78,000.

Yes, that's right; it increased by 78,000. Unsurprisingly, we have heard little on this measure today.

In response, the Employment Minister, Chris Grayling, said:

It is clear that we are seeing the effect of the international economic crisis on the UK labour market. That's why, last week, we announced the right-to-buy housing scheme to support growth and today we are offering more support for jobseekers as sector-based work academies come on stream, combining real training, work experience and a guaranteed interview. Our new work programme is now up and running and offers people who have lost their jobs flexible, tailored support to get back into jobs and stay there.

I guess Grayling has to blame somebody but his comments are not credible. Unemployment is rising because of the government's failed austerity programme, plus a front-loaded public-sector job cull. Take responsibility -- tailored support doesn't work when there aren't any jobs. Guaranteed interviews will not work when, according to your data, there are 2.5 million unemployed and only 500,000 vacancies.

The work programme is already an expensive failure because there is insufficient demand in the economy, simple as that. Feeble excuses don't wash.

This inept coalition has no strategy for jobs or growth and its austerity plan is lowering growth fast and destroying jobs, as I have been warning for a while. This is as good as it gets, because unemployment is expected to rise inexorably from here for many more months and, based on current policies, it is hard to see where it stops.

George Osborne and his team believed in expansionary fiscal contractions, which mean that cuts in public spending allow the private sector to blossom. There was no believable empirical evidence to support such a contention and it hasn't worked.

I understand from my sources that cabinet members are close to panic as they have no idea what to do now -- the slowing economy has taken them entirely by surprise.

This was always an ideological attack on the state and the young are the ones who are going to have to pay.

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Tags: youth unemployment

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64 comments

Fri, 2011-10-21 21:44 — mike555

Hello Colin,

I try to keep my posts political rather than personal, though I will defend myself if ridiculed, as you will probably have noticed.

I argue that high house prices and high debt is bad, and that not much has been learned from the mistakes of the past, I'm not sure why this provokes such derision, but there you go, everyone is entitled to an opinion.

Fri, 2011-10-21 21:46 — mike555

It's especially puzzling because I consider affordable housing as being on the left of the political spectrum.

Thu, 2011-10-13 07:30 — Luddite (not verified)

"This was always an ideological attack on the state and the young are going to have to pay". What a silly thing to say... The simply truth is, the tap of state dependency run dry.. But let's not let ideological dogma get in the way of the truth. Mr Blanchflower is nothing more than an apologist for the previous Labour's governments failure to invest in Industry.

Fri, 2011-10-14 13:38 — matthew fox (not verified)

Do you mean surprise Bozo555?

For the sake of clarification, what on earth is a suprise?

Tue, 2011-10-25 09:30 — Colin Sloss (not verified)

I am not particularly friendly with Matt, Indu he seems to have a one track mind. Maybe I am trying to limit what people say, Maybe I should post anoymously and be really rude to people! I don't see why Mike put up with the abuse from Matt.To be honest it looks like bullying.

Tue, 2011-10-25 10:11 — mike555

@Colin

"I don't see why Mike put up with the abuse from Matt"

If anything it's flattering, I make some serious and valid points, which I think is the problem.

Fri, 2011-10-14 14:39 — mike555

@Matt

"Do you mean surprise Bozo555?"

Just the sort of pathetic response I've come to expect from you. No answers as ever, just ridicule.

Sun, 2011-11-27 21:25 — sandy (not verified)

What ever goverment is in, but if they cannot find jobs for the english people,then how can they find jobs for the endless flow of asylum seekers, they need to put their countrys act together instead of coming here, poland is one of them, they are the down fall of our country

Thu, 2011-10-13 11:30 — Clare (not verified)

Foxy

"Gordon Brown's role after the collapse was first class. It was GB that managed to get the world to sing from the same hymn sheet - to act decisively and as one. He won praise from around the world."

yes he loaded taxapyers with even more sovereign debt, now the sovereigns are really creaking. nice one how to turn a banking crisis into a sovereign crisis what a triumph. say what you will about brown but he has a special talent that is unmatched for borrowing money. it's the broken window parable mentality of the left again and again, I imagine fox thinks the riots helped create growth because it created some work for glaziers.

Thu, 2011-10-13 11:58 — Marco (not verified)

Seriously Danny, just become a labour MP and be done with it, ok.

If you seriously equate this with the Gov cuts then well what's the point anymore...

Slight crisis abroad Danny, but nevermind it's the EMA......... jeez

Fri, 2011-10-14 16:30 — matthew fox (not verified)

You do make me smile Bozo555, the first to point a finger, the last to concede.

Thu, 2011-10-20 09:03 — Colin Sloss (not verified)

Here is something for Awake, Indu Pendent and Mike555. I recently read a book that had this '(W)hat the Internet and its cult of anonymity do is provide a blanket sort of immunity for anybody who wants to say anything about anybody else, and it would be difficult in this sense to think of a more morally deformed exploitation of the concept of free speech.' Richard Bernstein, New Yok Times.
)

Thu, 2011-10-13 12:44 — BigC (not verified)

What on earth has the abolition of EMA got to do with youth unemployment???

If the lack of EMA means young people aren't carrying on in eductation then that shows they were just doing college so they didn't have to go to work! Now they're claiming benefits for the same reason! The jobs are out there...if you look hard enough...I did and got one dead easy!

Fri, 2011-10-14 16:37 — mike555

@Matt

"You do make me smile Bozo555, the first to point a finger, the last to concede."

Right, I've answered all your ridicule and questions, you have a long list of questions to answer. I don't think this is lost on other readers. Like I said before, I don't even think you believe what you write.

Sun, 2011-10-23 22:32 — Indu Pendent (not verified)

@Colin ISTJ

I see you are trying to constrain and control what people as usual. You are the yin to Foxy's yen who likes being told what to think.

Thu, 2011-10-13 14:08 — Mark Allan (not verified)

Clare,the thing is Osbourne is borrowing even more money than was intended to pay for the rise in claiments and fall in tax revenues due in the main his deficit cutting strategy

Fri, 2011-10-14 17:15 — matthew fox (not verified)

I could never believe what you write Bozo555, don't you remember writing low interest rates where
" Propping Up " house prices.

It is an old gag, but still works on many level.

Thu, 2011-10-13 14:35 — Clare (not verified)

@mark

"Clare,the thing is Osbourne is borrowing even more money than was intended to pay for the rise in claiments and fall in tax revenues due in the main his deficit cutting strategy"

that's flawed broken window thinking, the cost to the government of pay someone dole is far less than the cost to them of paying them average salary to sit and be unproductive. if we could simply cure our econimics ills by employing ppl in the public sector it would be a great thing but sadly reality gets in the way. this line of thinking of simply adding public sector jobs is was has landed us with this appalling deficit.

Wed, 2011-10-12 18:45 — Mark Allan (not verified)

Awake,I'm not blaming Osbourne for the deficit. I'm blaming him for his tactics in trying to solve it. Theyre just making it worse.

Thu, 2011-10-13 15:46 — Mark Allan (not verified)

Clare,I didn't advocate adding to public sector jobs I was saying Osbourne's reasons for cutting the public sector are fine but his idea that the private sector would pick up the slack is flawed and he will miss his deficit reduction targets because of it.
So keeping somebody unemployed just because its cheaper is a sad indictement. Smacks of Lamont's view of "Unemployment being a price worth paying"

Wed, 2011-10-12 18:41 — Mark Allan (not verified)

Every week I read David Blanchflower,Bill Keegan and Paul Krugman and their ideas backed up with evidence as to why they're right. Then I listen to the blather of Death Sentance,Fraser Nelson and Niall,im not only clever but also good looking Fergusson and its just tripe which they speak backed up by their own self importance. Read these former 3 and be educated,there is cure,Keynes discovered it,they perscribe it!

Fri, 2011-10-14 18:39 — mike555

Oh look , it's Matt with more pathetic Bozo555 insults and no answers. Why don't you tell us what would happen to house prices if interest rates were at a neutral level of say 5%? I've asked you several times now, funny you don't answer that one.

Fri, 2011-10-14 18:40 — mike555

@Matt

I see you still haven't looked up the difference between "where" and "were" yet.

Tue, 2011-10-18 10:09 — mike555

@Lady J

If you're including me in your 1%, just remember I argue that high house prices are bad and high levels of consumer debt and reckless lending are bad. This has provoked much ridicule.

I don't defend the Tories, I think they're all as bad as each other. I also don't think anything has been learned from the credit crunch and whole financial crisis.

Mon, 2011-10-17 10:42 — Indu Pendent (not verified)

@matt

"As I have mention before Indoo, Dagenham is still exporting Diesel Engines, or have you forgotten that too?"

The engine plant did not need the retooling investment that the body shop and assembly plant needed for the new fiesta.

Starting to think you dont know very much about manufacturing. Its the grubby thing the Labour elite would not want their kids to work in.

Thu, 2011-10-13 17:07 — matthew fox (not verified)

With those comments Clare, or should I say Nightmare, your imagination seems to be very limited.

Unlike you Nightmare, I didn't see any humour in the riots, espically with people losing their lives, or is it just me?

Fri, 2011-10-14 20:25 — matthew fox (not verified)

It seems poor Bozo555 can't bring himself to remember his own theory.

0.5% interest rate happened in March 2009. They had been in decline since Oct 2008.

House prices suffered a double digit decline in 2008, and dropped in 2010 and into 2011.

But unfortunately for Bozo555, the madness continues. This imbecile speculates that the bank bailouts actually helped house prices rise!!!!!!

The bank bailouts happened on the 8th of October 2008. The package included £50 Billion of state investment of the banks.

Unfortunately for Bozo555, any
" Shot in the arm " was temporary at a stretch. House prices rose in the spring of 2009, but as mentioned, declined in 2010 and into 2011.

Thu, 2011-10-13 17:55 — matthew fox (not verified)

Indoo, if you could only face facts.
Senior Ford Management went out of their way to blame overcapacity in their European Operations. If you have a problem, have a go at Jacque Nasser, the Former head of Ford and a darling of the Right.

Your rants over Dagenham and Labour really tell me how little you know.

I notice you ignored the article I posted, showing the £40 Million investment in the Nissan Sunderland Plant. If Labour where so anti UK industry why did they pony up the money?

Tue, 2011-10-18 17:39 — mike555

I see inflation has taken another big hike, looks like it could be a problem after all, more QE anyone?

Wed, 2011-10-12 18:37 — Awake!

u seriously blame Osbourne for all of this??

Fri, 2011-10-14 22:09 — mike555

@Matt

Dismal, as ever.

Fri, 2011-10-14 23:27 — matthew fox (not verified)

No Bozo555, the truth, the whole truth and nothing but the truth. Just point out my factual inaccuracies.

Over to you old chap.

Wed, 2011-10-12 18:07 — Clare (not verified)

Danny I saw you on Bloomberg 5 minutes ago wearing a big pair of rose tinted specs. Was that you idea of a joke or an open goal for your critics? personally I thought they were extremely fetching.

Thu, 2011-10-13 21:08 — Indu Pendent (not verified)

@matt

Foxy, after burning down your own straw man now you go over it with a tractor and plough to obliterate it.

Indu 1 Foxy 0

"the Former head of Ford and a darling of the Right". The Labour elite would not give Jack the knife and his team the time of day . They put their egos and dismissiveness about the grubby Dagenham maker far above the UK national interest. Truely disgusting discriminatory behaviour in a modern democracy.

I have other examples where Labour MPs have obstructed makers and doers on discriminatory political grounds to the extend it damanged the national interest. They are not fit and proper people to occupy positions of public trust.

Regarding the £40M to Nissan. Two things 1)Check your dates and facts, it arose 2 years after when Labour should have supported Ford and resulted from extensive lobbying and European funding. Nissan was only looking at the UK. 2) when the Labour spin machine got into gear it was heralded as 'clean', 'modern' ,'easy going', 'technological', 'modern', 'importing Japaneze technology'. Go read about it. Everything in the brave new world that unloved "grubby" UK industry is not to Labour.

Labour took upon itself a project to rid the UK of the beast of Industry that so down treads the common working man.

Wed, 2011-10-12 18:26 — Mark Allan (not verified)

I've been through the Thatcher years and I believe this will be worse. Its funny how when Brown et al were using the global crisis as their reason for the bad figures they were mocked by the the Tories. Fast forward and who's using it now?
Their only priority is to cut the deficit irrespective of the consequences. Then don't be suprised after making the cuts putting 1000's out of work,instil fear and dread throughout the nation by saying we're broke that the last thing people will do is go on a spending spree.
So no demand,no private sector job creation. I'm no economist but is it really that hard to wonder why we are where we are today.
Before the usual folk get on to throw Labours profligacy in my face. Labour spent 45 billion alone in saving RBS, so you could get your money out of an atm the next day. The Tories wanted the banks to be left to fail imagine the chaos then. And also less regulation not more.
Yes Labour was spendthrift when it had it but the majority of that deficit is bankbail out money. I'm glad Brown and Darling were in charge then to take control,I dread to think what these two would'vd done.

Wed, 2011-10-12 19:01 — mike555

I'll tell you what was bad for the young - the massive house price boom post 1997, what did that do to peoples ability to raise a family and lead a decent quality of life?

It's funny how it was all a global crisis in 2007 when the government had been in power for 10 years but now it all seems to be the Coalitions fault having been in power for less than 2 years.

Thu, 2011-10-13 22:03 — matthew fox (not verified)

Too many agricultural references for me Indoo.

If Labour didn't give Ford the time of day, why didn't Ford close Dagenham close completely. As I have mention before Indoo, Dagenham is still exporting Diesel Engines, or have you forgotten that too?

Wed, 2011-10-12 19:09 — mike555

Just so as it's clear, I don't like the Tories either, the way the latest round of inflationary QE has gone unchallenged tells me all I need to know about them.

Wed, 2011-10-12 19:15 — matthew fox (not verified)

If Tom Keene needs a clown on his Midday programme, Clare should put herself forward, then again, they would have delay the broadcast until after 9pm.

Wed, 2011-10-12 19:30 — matthew fox (not verified)

Bozo555 is in da house.

For the sake of factual accuracy, when Bozo555 talks about the global crisis, I am assuming he is talking the global financial crisis 2008-2009.

https://mitsloan.mit.edu/MSTIR/world-economy/Crisis-2008-2009/Pages/defa...

Thu, 2011-10-13 22:25 — writeon1

Blaming Browne and New Labour for the economic crisis that's engulfing almost the entire western world, and shows signs of spreading the longer it continues, is a absurd.

The main crisis we face isn't the deficit, or the national debt, it's the disaster of unemployment and low growth, which the current government's policies don't stand a chance of curing, on the contrary, their dogma's will only make things worse, risking a semi-permanent recession.

Ideally we shouldn't even be in this position, but it was inevitable given the economic policies followed by changing governments over the last thirty years, which were hopelessly flawed and undermined the country's longterm prosperity.

If only there were simply, magic solutions to the challenges we face, if only there was a super ideological wand that worked, unfortunately there isn't.

Getting out of the dead-end we're in is going to take an awfully long time. And where does one even start to begin?

To be honest, I'm not even sure that we do get out of the recession we're mired in. This is, in my opinion, the end not just of cycle, but of an entire epoch, and that the society that eventually emerges on the other side will look very different indeed.

The left seems to have an almost religious faith that Keynes will work this time too, as it apparently worked during the last Great Depression. I'm not sure about this faith, though compared to the dogma of the neo-liberals, which is a ticket to doomsday, I can see why Keynes seems so attractive.

The only hope is to declare war on unemployment as the first priority, if the market can't create enough jobs then the state will have to do the job. This could be done by a radical reform of the tax system to reverse the policies of the last thirty years and shift the burden away from ordinary people, upwards.

The banking system should be nationalised as well, after all, in reality it already has been taken over by the state, at least the debts have, no we need to ensure democratic control of how our money is allocated.

Second one could begin a programme to reduce military expenditure by 90% over the next decade and abandon the nationalist pretense that the UK is a great power. We don't have any enemies and the military budget is massively inflated.

The 80 billion they propose to waste on the Trident nuclear arms project should be directed to creating jobs and repairing the country's infrastructure.

Wed, 2011-10-12 20:04 — Clare (not verified)

fox you are clearly stupid the sub prime crisis started in 2007 in the US as was the NR collapse here. the money markets had frozen by 2007 but then you are so utterly dim it's no surprise to see you getting your facts so wrong and being so utterly pompous about it. stick to watching night garden its about your level

Wed, 2011-10-12 20:15 — mike555

@Matt

"For the sake of factual accuracy, when Bozo555 talks about the global crisis, I am assuming he is talking the global financial crisis 2008-2009."

More pathetic insults again I see. What are your thoughts on the house price boom under New Labour and the effect it had on the low / medium paid? I can't remember you ever answering, fuuny that isn't it?

Thu, 2011-10-13 22:38 — mike555

Oh look, no answers from Matt again. What a suprise.

Wed, 2011-10-12 20:18 — mike555

Here is a timeline of events of the credit crunch, just in case anyone thinks it didn't happen in 2007:

http://news.bbc.co.uk/1/hi/7521250.stm

Wed, 2011-10-12 20:19 — Clare (not verified)

"Yes Labour was spendthrift when it had it but the majority of that deficit is bankbail out money"

sorry you are just wrong there its clear you don't understand the difference between the national debt and the budget deficit. as a proportion of our total debt including on balance sheet national debt, PFI and unfunded liabilities like state and public sector pensions the bank bail out represents less than 2% of this. the deficit (which is basically gov expenditure - tax revenue for a single year) mostly which is structural and exists purely through government overspending.

Wed, 2011-10-12 20:24 — mike555

@Matt

Do you know how to use a calendar? I should hope so after the amount of ridicule you've dished out about the use of calendars.

Wed, 2011-10-12 20:35 — matthew fox (not verified)

I know how to use a calendar Bozo555, but thanks for asking.

I take it your pretending to know more about the " Global Financial Crisis " than Simon Johnson, a former Chief Economist of the IMF and Andrew Lo, who is an authority on Hedge Funds, and has a PhD in Economics from Harvard.

But when you talk about a " Global Crisis " you are referring to the Global Financial Crisis "

Sun, 2011-10-16 12:04 — mike555

So there we go, I back myself up again with facts, what have you got to say about it Matt? Or do you just have insults?

Wed, 2011-10-12 20:44 — Daniel (not verified)

Mike555

The massive house boom began way before 1997. Try 1981 as the start with the RTB; and then in 1986 with financial deregulation.

BTW you don't seriously think that Brown or the UK caused the global financial crisis do you? If there is a single person to blame it will be the ex Fed Chair Alan Greenspan, the lover of right wing nut-job Ayn Rand. This connection to Rand and position of power he was in is all you need to know.