skip to main content

'Olympics effect' boosts UK job market

The Olympic Games delivered a boost to Britain's jobs market after official figures today showed another drop in unemployment as the part-time workforce soared.

The Office for National Statistics (ONS) said the jobless total fell by 7,000 to 2.59 million in the quarter to July - an unemployment rate of 8.1%.

That is after a big jump in the number of people in work, with London one of the biggest gainers after hosting the Games.

But the so-called "Olympics effect" masked a less rosy picture outside London, with some regions suffering hefty rises in unemployment.

And experts fear there could be an Olympics hangover now that the temporary boost from London 2012 is over.

Today's figures show that outside London, unemployment rose by 23,000 in Yorkshire and Humber in the three months to July and by 16,000 in the West Midlands.

Northern Ireland was also badly affected, with 10,000 more jobless in the quarter.

The ONS figures revealed that London accounted for 91,000 of the 236,000 rise in the number of people in work in the quarter to July, which is the largest quarterly rise for two years.

The total number of people now in work stands at 29.6 million.

There was also a big fall in those claiming jobseeker's allowance, down 15,000 between July and August to 1.57 million - the largest monthly fall since June 2010.

London accounted for 5,500 of the fall in the so-called claimant count, providing further evidence of an Olympics boost.

Other figures revealed the number of part-time workers leapt by 134,000 to reach 8.12 million - the highest since records began in 1992.

The number of Britons working part-time because they could not find a full-time job also hit a record high of 1.42 million.

Samuel Tombs at Capital Economics said while the headline drop in unemployment was encouraging, the detail of the ONS report showed a "less impressive picture".

He added that other recent employment surveys suggested many of those taken on for the Olympics "will struggle to find work now that the Games have finished".

John Walker, chairman of the Federation of Small Businesses, said the continued fall in unemployment was good news, but that for the economy to recover at a faster pace more people need to find full-time work.

He added: "Policies targeted at stimulating job creation, such as extending the National Insurance contributions holiday, are needed to give small firms the confidence to create full-time positions and take on staff."

Unison general secretary Dave Prentis said the Government needed a long term plan of job creation to ease the UK's economic woes.

He said: "For families suffering the misery of unemployment, any decrease will be welcome news, but it is clear when you look at the bigger economic picture that any talk of growth is premature.

"In areas such as Yorkshire and Humberside, and the West Midlands - where unemployment is already among the highest in the UK - unemployment continues to go up, meaning yet more misery for families struggling to get by."

The figures also showed the number of people out of work for over a year was the highest for more than 16 years - at 904,000, up 22,000 on the previous quarter.

Those classed as economically inactive, including those looking after a sick relative, on early retirement or who have given up looking for work, fell by 181,000 to nine million.

The ONS also revealed that public sector employment fell for the eleventh quarter in a row, by 39,000 on an underlying basis to 5.7 million in a further sign of the impact of Government spending cuts.

Youth unemployment rose by 7,000 to 1.02 million in the three months to July - an "uncomfortable" figure, according to Investec Securities economist Philip Shaw.

Economists have been consistently surprised by recent unemployment reports, which come against a grim economic background in the UK.

The country is suffering its longest double-dip recession since the 1950s, with gross domestic product - a broad measure of the economy's value - falling 0.5% between April and June.

It is thought that aside from the recent Olympics fillip, figures have also been helped by increasing numbers of self-employed, while firms are also seeking to keep hold of staff, albeit by offering more modest pay increases.

Today's figures for the quarter to July showed average earnings rose 1.5% on a year earlier, down 0.3% on the previous quarter.