IT is a measure of the parlous state of the UK economy that, when the good news is announced about unemployment falling for the second month in a row, it is immediately tempered by warnings against complacency.
There is little cause for celebration when, despite the drop, more people are out of work than this time last year and the number of those unemployed for more than a year is the highest since 1996. Even more worrying is the gloomy confirmation provided by the latest figures that young people face the greatest difficulty, especially in Scotland. Although youth unemployment declined in the three months to March, 94,000 Scots aged between 16 and 24 were out of work in this period. This amounts to 23.1% of the age group, compared with 21.9% in the UK and the overall unemployment rate of 8.2%. The persistence of this high rate exposes the limitations of interventions such as additional apprenticeships, the Scottish Government's Youth Contract and the UK Department of Work and Pensions initiative to encourage employers to take on young recruits. Welcome as these are, economic growth is required before fears of a lost generation can be addressed, far less dispelled.
There are other disappointing details beneath the headline figure of a 45,000 drop in the number of people claiming Jobseeker's Allowance (JSA) in the UK. They provide a snapshot of the difficult economic times for individuals and families. The rise in the number of people in employment (the 24,000 increase in Scotland was the highest since last spring) was mainly due to an increase in part-time work. While that is significantly better than being unemployed, not least because it improves the chances of moving into full-time work, the low income, exacerbated by reductions in tax credits, means many people will struggle to meet essential costs. Unless greater flexibility is brought into changes to welfare benefits, particularly the replacement of disability living allowance (expected to reduce the number of claimants by 500,000), some disabled people will find it extremely difficult to hold down jobs, an example of a policy achieving the opposite of what was intended.
The number of women out of work remains high and will increase as cuts take effect in the public sector. It has a high proportion of women employees, and mothers will also be hampered by a reduction in childcare.
Without measures to stimulate growth, there is little prospect of further falls in unemployment as the Bank of England reduced its growth forecast to 0.8% and predicted inflation would remain above the 2% target.
Against this background, the warning of a buffeting from the approaching storm in the eurozone, by the Bank's Governor Sir Mervyn King, must be taken as a signal to reinforce resilience. Whatever happens in the eurozone will have a significant impact on the UK economy, whose biggest market is Europe. Jitters are already evident in the financial markets. The argument between the German Chancellor and the new French President over austerity versus growth has already been overtaken by the need for contingency planning pending next month's general election in Greece. Firewalls are essential but, in seeking damage limitation, growth must be part of the package for economic stability.
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