Wednesday July 15, 01:41 PM
UK jobless rate strikes 12-year high
By Roland Jackson
LONDON (AFP) - Britain's unemployment rate surged to 7.6 percent of the work force in May, the highest level since Labour won power in 1997, official data showed Wednesday, baring the depths of damage from the global financial crisis.
The latest dire economic data to hit recession-battered Britain comes as luxury car brand Jaguar on Wednesday said it would axe up to 300 jobs and end production of its X-Type car at a factory in northwest England.
The unemployment rate struck a higher-than-expected 7.6 percent in the three months to May, the worst level since January 1997 and the biggest quarterly jump for 28 years, the Office for National Statistics said in a statement.
"These latest figures will make extremely grim reading for Britain's embattled businesses," said David Breger, a partner at chartered accountants firm HW Fisher.
"The recession continues to take its toll on the thousands of small and medium-sized businesses that are the lifeblood of this country's workforce, businesses that have been left high and dry by the banks' reluctance to lend."
The latest unemployment rate, which is according to the International Labor Organization (ILO) measure, was higher than market expectations of 7.4 percent.
In addition, the number of people in Britain claiming benefits increased 23,800 last month to 1.56 million, according to the ONS.
That was the biggest total since the Labour Party swept to power more than 12 years ago -- but it was also the slowest monthly increase since May 2008.
The data stripped bare the impact of the global financial crisis and the credit crunch -- which erupted in August 2007 as banks fretted over their exposure to soured bets on the collapsed US subprime home loan market.
The crisis has since pulled most major world economies -- including Britain, the eurozone, Japan and the United States -- into a deep recession.
In a bid to stave off job losses, major British companies are asking staff to take pay cuts and even work for free.
About a fifth of British Airways (LSE: BAY.L - news) ' 40,000-strong workforce, including pilots, have agreed to accept cuts in pay or to work for free to help the group save millions of pounds (euros, dollars).
Meanwhile telecoms group BT (LSE: BT-A.L - news) is offering employees a year at home in return for a 75-percent pay cut.
The ONS added on Wednesday that British unemployment, according to the ILO measure, rose by 281,000 to 2.38 million in the three months to May.
That was the highest level since 1995, while the quarterly increase was the largest since records began in 1971.
"The ILO data show more grim evidence of the collapse in the UK economy and the resultant toll on jobs," said Citigroup (NYSE: C - news) analyst Michael Saunders.
He warned: "We suspect that firms -- and of course the public sector -- have not yet even come close to completing the inevitable cutbacks to hours and jobs."
"The result is that unemployment is likely to go on rising for an extended period."
- Office for National Statistics (Data on unemployment)
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