Unemployment highest for nearly 10 years

The Government was hit by a fresh bout of bad economic news today when unemployment reached its worst level for almost a decade.

There were 1.72 million people out of work in the three months to July, up by 81,000 from the previous quarter and the highest total since the spring of 1999.

The number of people claiming jobseeker's allowance rose for the seventh month in a row in August, by 32,500 to 904,900 - the biggest monthly hike since December 1992.

The Office for National Statistics said the trend on both the claimant count and the wider number of jobless was increasing.

The number of workers in manufacturing continued to fall, down by 42,000 in the latest quarter to 2.87 million, the lowest since records began 30 years ago.

There was also the first fall for more than a year in the UK's employment level, down by 16,000 to 29.54 million in the three months to July.

Today's data showed that the number of workers in the public sector in June was 5.77 million, up by 13,000 over the quarter, while private sector employment was down by 29,000 to 23.77 million.

Vacancies were also down to their lowest level for more than a year to 613,200 after a fall of 56,900 in the quarter to August.

Economic inactivity also rose, with the number of people on long-term sick leave, looking after a relative, students or who have given up looking for a job up by 4,000 to 7.86 million - 20 per cent of the working age population.

Average earnings increased by 3.5 per cent in the year to July, up by 0.1 per cent from the previous month.

Wages grew by 3.3 per cent in the public sector compared with 3.5 per cent in private firms.

The number of days lost through industrial disputes in July was 363,000, the highest monthly total for more than two years, largely as a result of strikes by local government workers.

The annual total to July was 1.1 million, almost double the figure for the previous year.

Full-time and part-time employment levels fell back in the latest quarter, although the figures also showed an increase in the total number of jobs in the UK, up by 26,000 to 31.68 million.

Around 138,000 people were made redundant in the three months to July, up by 28,000 from the previous quarter - the highest figure for over a year.

The TUC warned today that the number of people out of work for at least a year could almost double to 700,000 by the end of 2009.

The union organisation said total unemployment could hit two million by next year, partly as a result of the Government's tougher benefits regime.