One in five young people out of work as jobless total hits 2.5m

Unemployment in Britain has surged by 49,000 to nearly 2.5 million, including one in every five young people – putting the number of 16- to 24-year-olds out of work at close to a million, the highest since records of youth unemployment were first kept in 1992.

The rate of joblessness among 16-to 24-year-olds is now 20.3 per cent, which is two-and-a-half times therate among the population as a whole.

The reasons that young people are suffering are complex, and reflected across Europe. During recessions, employers are more able to pick and choose, so are more likely to hire trained staff who are immediately productive. Young people also face competition from inexpensive and highly qualified workers from eastern Europe, while graduates have been taking school leavers’ jobs that they would not have considered a decade ago. Older people are retiring later, limiting vacancies.

Lower-skilled younger workers usually do badly in recessions, because they are the easiest to sack.

Hundreds of thousands more young people are thought to be in “hidden” unemployment, classifying themselves for example as students.

Other key unemployment measures gave a bleak picture, with the number of people in employment falling by 69,000 to 29.1 million. The employment rate fell to 70.4 per cent, down 0.3 per cent.

Most economists believe the jobless rate will gradually increase as spending cuts result in redundancies in the public sector over the coming months. While the private sector is creating jobs to replace them, they are largely part-time positions. The overall jobless claimant count defied expectations to fall by 4,100 people to 1.46 million.

Brendan Barber, general-secretary of the Trades Union Council, said: “While champagne corks are popping in the City, young people in the UK are being left to pick up the cost of a recession they didn’t cause.”

A spokesman at the youth charity The Prince’s Trust said: “Unemployment has a knock-on effect on a young person’s self-esteem, their emotional stability and overall wellbeing. The longer the period a young person is unemployed for, the more likely they are to experience this psychological scarring. This means an unhappy and debilitated generation of young people who, as a result, become decreasingly likely to find work in the future.”

Some economists did at least see some signs within the figures that things are not as bad as they could be. Philip Shaw, an economist at Investec, said: “Unemployment is broadly flattish, in line with expectations. One can hope that as the economic recovery gains ground and establishes more favourable momentum then this will continue.”

However, Mr Shaw said there were no easy solutions when it came to the persistent problems with youth unemployment: “Encouraging more apprenticeships may be a goodsolution in future but longer term the only real answer is to encourage better literacy and numeracy at schools.”

Those in employment are also finding that their wages packets are increasingly squeezed. Total pay including bonuses rose by just 2.1 per cent from a year earlier. Regular pay, excluding bonuses rose by 2.3 per cent from a year earlier, partly bumped up by banks, and considerably below the Consumer Price Index measure of inflation, at 3.7 per cent. Economists describe this as good news: it will reduce the pressure on the Bank of England to raise interest rates.