The Great Jobs Divide; as Unemployment Passes Two Million for First Time in 12 Years, the Public Sector Is STILL Recruiting - and Giving Big Pay Rises

Daily Mail (London), March 19, 2009 | Go to article overview

The Great Jobs Divide; as Unemployment Passes Two Million for First Time in 12 Years, the Public Sector Is STILL Recruiting - and Giving Big Pay Rises


Byline: Olinka Koster and Steve Doughty

PUBLIC sector workers saw their job numbers rise and their pay packets swell while unemployment for others passed the two million mark, official figures showed yesterday.

While employees in commercial businesses were thrown out of jobs at a record rate of more than 20,000 a week, state organisations took on an extra 15,000 staff.

This means that the number of taxpayerfunded jobs has shot up over the past nine months by nearly 50,000. At the same time the downturn has savaged the livelihoods of people working for private companies.

The breakdown by the Office for National Statistics also found that the growing numbers of public sector employees are enjoying above-inflation pay rises.

Average public sector annual increases over the past three months have run at 4 per cent, while the Government's favoured measure of inflation, the Consumer Prices Index, stands at 3 per cent.

In contrast, private sector rises have averaged 1.4 per cent over the same period, and, according to ONS indicators, in January this year private sector pay fell.

The widening gap between state employees and the rest has been a cause of deepening tension at a time when hundreds of thousands are feeling the sting of joblessness.

A particular source of resentment is the plight of small businesses, which are laying off workers in high numbers. Many point the finger of blame at banks which have received billions in public subsidies but are refusing to lend to small firms caught in hard times.

Yesterday's figures showed that unemployment has passed two million for the first time in 12 years on a rising tide of redundancies and benefit claims.

The landmark led Gordon Brown to speak of his regret over the unemployment figures in Commons question time. 'Any person who loses their job or fears losing their job - this is a matter of personal regret for me and for the whole Government,' he said.

Tory leader David Cameron, who is trying to push the Prime Minister into making an apology for the recession, claimed Mr Brown was 'in denial' about the state of the economy.

'There seems to be an enormous gulf between what he says and what the Government is doing,' he said. 'He is incapable of admitting he ever got anything wrong.' In the three months to the end of January, the number of those out of work jumped by 165,000 to 2.03million. Some 266,000 were made redundant, the highest number on record. It means almost 3,000 are losing their jobs each day. The 266,000 figure is a 137 per cent rise on the 112,000 seen in the same three months a year ago. .

same three months a year ago.

Numbers claiming Jobseeker's Allowance, the benefit for those who are looking for work, went up by 138,400, the largest monthly increase since 1971, to a total of 1.39million.

Private sector employment dropped by 105,000 over the year compared to the 46,000 leap in nine months in the public sector.

There are now 5.78million workers paid by the taxpayer compared to 23.6million in the private sector.

John Philpott, chief economist at the Chartered Institute of Personnel and Development, said: 'The private sector is bearing all the pain of the recession, with employment in the public sector continuing to rise and public sector pay running away from that in the private sector.' Charles Davis of the City consultancy Centre for Economics and Business Research said: 'There has to be a limit to how much longer this can go on.' Several analysts predict unemployment will rise to 3.2million next year, slightly more than 10 per cent of the workforce.

Economist Michael Saunders of Citigroup warned there was 'more economic pain to come', adding: 'Firms face huge pressure to cut costs - including labour costs - quickly.'

The increase in the number signing on for benefits reflects the problems facing small businesses, which are disappearing at the rate of 86 a day. …

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