Claimant count rise may hint at debt misery

The ongoing recession has not, it seemed, prevented some positive trends occurring in the economy. While a fall in inflation might have been expected …

The ongoing recession has not, it seemed, prevented some positive trends occurring in the economy. While a fall in inflation might have been expected for various reasons, unemployment is continuing to buck the trend.

Although a shrinking economy should, in theory, lead to jobs being shed, recent months have seen the opposite happening and the latest official figures have revealed the pattern is continuing.

In the three months to May 2012 the number of people in work rose by 181,000 to 29.35 million, an increase of 0.3 per cent of the working age (16-64) population to 70.7 per cent.

This was coupled with a drop of 65,000 in the tally of people out of work, cutting the figure to 2.58 million, down 0.2 per cent.

However, it is not all good news. A regional breakdown of the figures for the period showed that some regions have done considerably better than others. The north-west, for example, enjoyed a 1.3 per cent rise in employment, while London saw a 0.8 per cent increase, with the Olympics the likely cause (despite the failure of G4S to manage to recruit enough security staff). By contrast, employment fell by 0.2 per cent in both the West Midlands and Wales.

As a result the consequences for people in some areas will be better than others. In the West Midlands and Wales, there could be a net increase in the number of people who were once able to pay their monthly interest and bills, but subsequently find themselves unable to cope and in severe need of help.

Another important consideration is the claimant count. Not everyone who is unemployed seeks to claim benefits and this is borne out by the fact that the number of people receiving Jobseeker's Allowance (JSA) is always a much lower figure.

This may be partly due to some people expecting to soon be back in work, or feeling a sense of pride and independence in being able to fall back on their own resources, such as savings or other incomes in the household. But what the latest data did show was that there were 1.6 million people claiming JSA in June, up 6,100 on May.

What such a rise may suggest is that an increasing number of those who are not in work feel they need to claim the benefit, even for short periods out of work, to help make ends meet. That may often be the case for women, whose pay tends to be lower – evidence of this being that the rise in JSA claims was entirely down to a rise in 8,000 in the number of female claimants and a drop in male claims. 

Overall, the situation is certainly improving a little. Commenting on behalf of the Confederation of British Industry, the organisation's director for employment and skills Neil Carberry said: "Despite the challenging economic times, the British labour market is showing some resilience, with jobs being created and fewer people unemployed."

But, he added: "The persistent rise in the number of people claiming JSA remains troubling, however."

Even with the fall in unemployment, there will be many out of work who have been in such a situation for a long time whose savings have run out. Others may struggle to pay their bills even if they are jobless for a short period. For either group, seeking debt help as soon as possible is a very wise move.

Posted by Paul Thacker

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