Tim Kellett
PAYdata Blog, January 25th 2011

Last weeks UK unemployment figures make depressing reading, particularly for young people.  Whilst some analysts predict that overall, the UK will come out of recession by the end of the year; many expect unemployment to continue to rise over the coming months.

The Office of National Statistics (ONS) last week stated that UK unemployment rose by 49,000 to almost 2.5 million (equating to a rate of 7.9%) in the three months to the end of November 2010.

Two trends are of particular concern.  The first is the creep upwards in long-term unemployment, and the second is the number of young people unemployed.  Indeed, the latest figures show that one in five 16 to 24-year-olds are now out of work.  I am sure this is in no small part due to many employers stating they have cut back their training and graduate/apprentice programmes in the past two years.

However, despite a 6% fall in national output, unemployment is still lower than many analysts had predicted back in 2009.  This is due in no small part to an increase in private sector employment, up by around 180,000 (or 0.6%).  This rise took up the slack of public sector job losses (of 77,000 in the same period), due to the governments’ spending cuts designed to cut the budget deficit.

In the last few years, the employment figures have also been helped by a more flexible labour market.  Employees in both new and existing jobs have been willing to take cuts in pay and hours, and this has helped employers minimise job losses and retain key skills and experience.  Whether this flexibility can continue in the next 12 months is open to debate though, particularly with inflation on the rise and employers under greater pressure to increase pay in 2011.

Predicting unemployment trends in the next twelve months will be as difficult as predicting what will happen with the economy in general.  However, it will be interesting to see current views in the next PAYdata UK Reward Survey, to be released later this week.  If you are interested in receiving this, email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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