As unemployment rises to 2.5m, the UK is “not out of the woods yet”, according to Melanie Whitehall, director at Matchstick Recruitment.

Latest figures from the Office for National Statistics reveal that the rate of unemployment now stands at 8%, the highest since 1996, but the total number of people claiming unemployment benefit fell in March by 32,900 to 1.54m.

Whitehall says: “As the latest unemployment figures make clear, we are not out of the woods yet and a big question mark continues to hover over the economy.

“From a recruitment perspective, large and small companies alike remain unsure about what the future holds and this is reflected in the volatile nature of the jobs market at present. The big decisions are being put on hold.”

Kevin Green, the Recruitment and Employment Confederation’s chief executive, says: “Despite positive figures in the last three months, it is clear that the jobs market is fragile. However, it is important to note that these figures are a lagging indicator of our dynamic labour market.

“Based on the data available, we predict that unemployment has peaked and that we will see a small reduction in the number of unemployed over the next quarter. The outlook for jobs market will then become dependent on how the incoming government implements public sector constraints. We are stressing that whoever wins the election needs to focus on reform of public services rather than on simply slashing jobs.”

David Kern, chief economist at the British Chambers of Commerce (BCC), adds: “These figures are disappointing, but not surprising given the worrying trends that have been apparent in recent months. They support the BCC’s forecast that unemployment is set to reach 2.65m later this year.
 
“In addition to a rise in unemployment that reverses recent declines, we have witnessed a large fall in employment and a sharp increase in inactivity. The number of people working part-time has risen to a record high.”

Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), says: “The latest rise in headline unemployment takes the overall jobless total to 2.5m, 8% of the workforce. The situation would have looked worse had the number of economically active people – i.e. those outside the jobs market - not also increased by 110,000 in the latest quarter.

“Students account for the bulk of the increase in the number of economically inactive, indicating the extent to which young jobless people have been turning to study to avoid the dole. Without a 71,000 quarterly rise in student numbers, youth unemployment (16-24-year-olds) would have reached exactly 1m, further fuelling fear of ‘a lost generation’.”