UK unemployment highest in 17 years

British musicians join unemployed young people as they stand in line outside a central London job centre as part of the Battlefront Campaign against youth unemployment.

Story highlights

  • Unemployment is at its highest level for 17 years
  • Youth unemployment rose sharply but stayed below the 1m mark
  • Over-65s accounted for 74,000 of a drop of 178,000 in employment in the quarter to 29.1m
  • 8.1 per cent unemployment rate compares with 9.1 per cent in the US and 10 per cent in the eurozone.
Unemployment in the UK has risen by 114,000 to 2.57m, its highest level for 17 years, as the country's painfully slow recovery from recession takes its toll on the labour market.
The increase, which was larger than economists were expecting, took the jobless rate to 8.1 per cent of the workforce in the three months to August -- the highest for 15 years and a rise of 0.4 percentage points on the previous three months.
Youth unemployment rose sharply but stayed below the politically sensitive 1m mark. The number of 16 to 24-year-olds out of work rose by 74,000 to 991,000, or 21.3 per cent of the economically active population in that age group.
Older workers were also badly affected. Over-65s accounted for 74,000 of a drop of 178,000 in employment in the quarter to 29.1m -- the biggest fall in that age group since records began in 1992.
That led to speculation that employers were getting rid of older workers before the abolition of the default retirement took effect. It was phased out from April and ended completely at the start of this month.
The rise in the number unemployed to its highest level since 1994 confirms that the jobs market is deteriorating as the UK emerges even more slowly from recession than in the Great Depression of the 1930s.
Until three months ago the labour market was performing relatively well, but private sector job creation is now failing to keep up with job losses in the public sector. Many economists expect unemployment to reach 2.7m or 2.8m next year.
Chris Grayling, employment minister, said: "It is clear that we are seeing the effect of the international economic crisis on the UK labour market."
The Department for Work and Pensions said the 991,000 unemployed under-25s included 270,000 students looking for a job. On Wednesday it is launching sector-based work academies, offering training, work experience and a guaranteed job interview to up to 50,000 people over the next two years, many of them young people.
The 8.1 per cent unemployment rate compares with 9.1 per cent in the US and 10 per cent in the eurozone.
The number of people claiming jobseeker's allowance rose by 17,500 to 1.6m in September, the seventh month in a row in which the total has increased.
Pay pressures remained subdued, with average earnings excluding bonuses up 1.8 per cent on a year earlier, down 0.3 points on the previous quarter and less than half the rate of inflation, with only finance and business services showing strong growth. Including bonuses, the rise was 2.8 per cent, down 0.1 points.
North-east England had the largest increase in unemployment and the highest rate, up 1.5 points on the quarter to 11.3 per cent of the workforce., with London up 0.7 points at 10 per cent. The lowest rate was in south-east England, up 0.1 points at 5.8 per cent.