What's happening to unemployment?

The latest unemployment figures have been released, and show around 940,000 unemployed people, up from 908,000 last month.

Most current predictions say that unemployment will hit 1 million by Christmas, and potentially reach 2 million at some point thereafter. This is substantially less than the 3 million unemployed in the 1980s recession, but is still worse than many UK workers have faced in their career to date.

What the DWP are doing

Last week's JCP national conference included preparations for the expected influx of new claimants. James Purnell gave a keynote speech announcing enhanced mortgage protection and committing to maintaining active labour market policies to prevent 1980s-style mass unemployment. There have been no announcements on changes to welfare-to-work programmes, although existing programmes included predictions of significantly increasing JSA entry rates in any case.

The impact on providers

One of the bigger welfare-to-work providers in the UK has produced a model for unemployment over the next 5 years, and draws some disturbing inferences:

• JSA unemployment rises in a straight line to 2,000,000 unemployed by August 2010
• Then goes back down to its current level by mid-2013
• This pushes direct benefit payments up by about £5bn, plus further costs from expanding Jobcentre Plus capacity to handle so many customers
• Consequently, there's a real risk that there simply won't be enough money to deliver welfare-to-work services to the full range of customers. Harder-to-help customers might find themselves on the shelf again
• In FND providers' nightmare scenario, this would also remove the incentive of government to agree realistic targets for FND. They could then hold back hundreds of millions of pounds from underperforming contracts to spend on cheaper Jobcentre services, Programme Centres and the like. This does rely on the assumption that the government would be callous / short-sighted enough to let the entire provider marketplace drop off a precipice

Take part in a discussion on the impact of unemployment on welfare-to-work delivery here.

Note - we used the JSA claimant count to mean unemployment for all the figures in this article. The BBC News article also counts IS claimants.