Unemployment falls but part- time working hits record high

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The number of part-time workers has hit record levels with people struggling to find full-time employment. Photograph: Andy Rain/EPA

The number of part-time workers in Britain has hit a record high as more people are forced to take shorter hours or not work at all.

Official data released this morning showed the number of people claiming unemployment benefits fell last month, but more people complained they could not get full-time work and there was a further rise in long-term unemployment.

At 7.82 million people, the part-time employment level was the highest since records began in 1992, representing more than a quarter of the workforce.

But in a fillip for the new coalition government, the latest Office for National Statistics (ONS) figures also showed a fall in the claimant count of 20,800 last month, better than the 20,000 predicted. At the same time, the unemployment rate on the wider ILO (International Labour Organisation) measure slipped back to 7.8% for the three months to May, below forecasts for it to stick at 7.9%.

But with public sector job cuts on the horizon, experts think that level will rise again soon. Trade unions are worried that the cutbacks could actually harm the private sector as big government contracts are scrapped, and they argue such employers will be in no position to pick up the jobs slack.

TUC general secretary Brendan Barber seized on the details behind the headline fall in unemployment. “These are flat, disappointing figures and you need a magnifying glass to see much sign of recovery here,” he said.

“The falls in headline and youth unemployment are pretty small, but the rises in long-term unemployment and involuntary part-time and temporary work show just how fragile the economy remains. There is still only one vacancy for every five jobless people.”

Economists noted that wage growth had also slowed, with total pay including bonuses up an annual 2.7% for the three months to May 2010, down from a 4.1% rise in the three months to April. Excluding bonuses, pay growth slipped to 1.8% from 1.9%.

That and the fact workers were struggling to secure full-time jobs did not bode well for consumer spending, they warned. Vicky Redwood, senior UK economist at Capital Economics, said: “The UK labour market has perked up a bit, but we still doubt that private-sector hiring will pick up strongly enough to offset the severe public sector job cuts.

“We still think that household incomes face a severe squeeze from the looming public sector job cuts, tax rises and weak pay growth.”

The pound rallied on the stronger than expected data and touched a two-month high of $1.528 against the dollar, as traders became more upbeat in their outlook for the UK economy.

The ONS figures also showed an improvement in the number of people going in to jobs in the three months to May. The 160,000 quarterly rise was the biggest since August 2006. But much of that was down to people getting part-time jobs. In fact, part-time employment rose by 117,000 and self-employment by 59,000, while the number of full-time employees fell by 22,000.

The number of people who said they were in part-time work because they could not find full-time jobs continued to rise and was up 21,000 on the quarter to 1.07 million.

Many companies, including car plants and shops, cut back workers’ hours during the recession and it appears that trend is not reversing yet. Companies also appear reluctant to bank on a strong recovery and create new jobs. A TUC analysis of the latest redundancy and vacancy figures today suggests job availability in key sectors is still well below pre-recession levels.

A separate report today from the Chartered Institute of Personnel and Development (CIPD) warns that growth in the next few years has only to be slightly weaker than the Office for Budget Responsibility’s (OBR) current central forecast for the jobs outlook to look “a lot worse” than the government anticipates.

The report predicts that the UK economy will need to grow by at least 2.5% a year between now and 2015 if the private sector is to create enough jobs to more than offset the employment impact of the impending squeeze in public spending.

“A slightly milder growth outcome – which many would consider a decent recovery in output given the various strong headwinds at present facing the economy – is easily as imaginable as the OBR’s central forecast and would leave unemployment still close to 2.5 million by 2015, meaning Britain faces at least half a decade of serious prolonged jobs deficit,” said John Philpott, chief economic adviser at the CIPD.