Staff cuts force up jobless total

UNEMPLOYMENT rose for the third month in a row in December as firms axed staff to survive the economic downturn. December's claimant count rose by 3,200 to 963,500 although the jobless rate held steady at 3.2%.

This confirmed fears that a sustained rise in unemployment has begun following a steady drop since the recession of the early 1990s. The Government-preferred International Labour Office measure, which also captures those out of work but not yet drawing the dole, rose by 15,000 between September and November to 1.522m. On this measure, the jobless rate remained at 5.1%.

The collapse of job advertising in national newspapers, tracked by the Recruitment and Employment Confederation, points to an 800,000 increase in unemployment in coming months, although City economists expect the increase to be a more modest 150,000. Average earnings growth in the three months to November slowed to 4.2% due to lower overtime payments in manufacturing and lower bonuses.

The Engineering Employers' Federation said nearly 25% of companies were unable to give their staff a pay rise during the fourth quarter of 2001. The average pay settlement fell to 1.7% in December.