UK Unemployment Rate Rises To 17-Year High

Unemployment rose by 118,000 in the three months between September and November (Stuttgart: A0Z24E - news) taking the total jobless count to 2.685 million, a figure the Prime Minister called "hugely unwelcome".

The numbers confirm analyst expectations of a rise from last month's figure of 2.6 million, taking the jobless rate from 8.3% to 8.4%.

But benefit claims saw a smaller than expected rise of 1,200 in December to 1.6 million.

Although this was the highest level since January 2010, it suggested that the labour market deterioration may be easing.

The issue was the subject of David Cameron's clash with Labour leader Ed Miliband at Prime Minister's Questions.

"The defining characteristic of this Government is it does nothing as thousands of people find themselves unemployed," Mr Miliband said.

Any job losses are a tragedy for those involved, the Prime Minister replied, adding: "We need more private sector employment, we need to move further and faster on that agenda."

Employment Minister Chris Grayling echoed the thought saying that although the level of unemployment was "clearly much too high" the figures were more complicated than the headline numbers suggest.

He told Sky News the increase in those seeking Jobseekers' Allowance, albeit small, was partly due to the Government moving some people from other benefits onto the dole so the actual figure may actually have decreased.

Also employment in the private sector had increased in the three-month period, as more people took on part-time jobs.

"So at the moment, just in that one quarter at least, the private sector is creating jobs faster than the public secotr is losing them," he said.

Sky News economics editor Ed Conway said: "These figures were, on the face of it, rather worse than had been expected.

"City economists had expected the unemployment rate to remain steady at 8.3%, so this increase to 8.4% is a disappointment.

"However, unemployment is a lagging indicator: and so as the economy weakens in the coming months, it suggests that unemployment will increase even further. Indeed, some economists expect it to exceed the 3m mark this year or next."

Meanwhile, the figures have revealed that a staggering 988,000 working days were lost in November due to industrial action, reflecting the effect of the public sector strike on November 30 on the official statistics.

Wage growth remained muted, with average earnings up 1.9% compared to a year ago.

Smaller firms are expected to shed staff in the first three months of the year according to the Federation of Small Businesses (FSB).

The group also said the Government should be "bolder" in its changes to employment law, including exempting micro firms from proposals on pay audits.

A survey of over 1,600 FSB members showed that around one in 13 planned to lay off workers in the coming months.

FSB chairman John Walker said: "The beginning of 2012 is beginning to look bleak, with confidence incredibly low and businesses looking to shed staff.

"However, things do not need to be so negative. If the Government makes the right choices and puts action into words we can turn this around.

"Tinkering and increasing existing employment laws will only serve to worsen this situation, but by putting simple measures in place, such as excluding micro firms from the right to request flexible working for all, will help free businesses from the shackle of red tape so they can grow, innovate and take on new staff."

Meanwhile, the TUC has warned that the prospects of finding a job are likely to get "much worse" in the face of fresh cuts in public spending this year.

It forecasts more than 700,000 jobs will be axed by the end of 2017 and say it will be even harder for the unemployed to get back into the labour market.

And up to 20 job seekers are chasing every vacancy in parts of the country, five times the national average, according to a study by the think tank IPPR North.