Unemployment surges as public sector job cuts hit home

Job Centre Plus
Image caption The North East has the worst unemployment rate in the country

It seems likely that public sector job cuts have made a significant contribution to the last quarter's surge in unemployment in the North East.

The number of people out of work in the region rose by 18,000 in the last three months - a substantial contribution to the national increase of almost 80,000.

The stats do not make pretty reading.

The North East has the highest unemployment rate in the country with 10.7% out of work - edging ever closer to one in nine of the working age population.

Economic inactivity

Middlesbrough has the highest rate of unemployment of any local authority in the UK at 14.3%.

The region also has the lowest employment rate in the country - 65.9% - with the rate falling significantly in the past year.

And the North East also has the highest economic inactivity rate with one in four people not contributing to the economy.

It is impossible to be categorical about what factors might have contributed to last quarter's rise in unemployment.

But government figures do suggest that there has been a big reduction in public sector employment.

The number of people employed in the UK's public sector has fallen by around 110,000 in the last three months.

It's the biggest decline in public sector jobs since records began in 1999, and evidence that government cuts are biting.

Urgent action

And given the North East's dependence on the public sector, it would be surprising if this quarter's extra jobless people didn't include a number who used to work for councils and government departments and agencies.

It also seems to include many women too, who were often employed in the public sector, as well as more than one in five young people.

Image caption Even though unemployment is rising George Osborne insists life would have been worse under Labour

Kevin Rowan, from the Northern TUC, said: "The cuts are hurting but not working - at all. They are simply bleeding the life out of the North East economy and we need urgent, remedial action to stem the flow and save us from a bleak future."

Of course, the government always knew that there would be a significant fall in public sector employment.

But the worry is that so far the private sector isn't generating enough extra jobs to take up the slack.

There was always a danger that there would be a significant time lag between the loss of public sector jobs, and the creation of private sector replacements.

Chancellor's strategy

The government will be hoping that lag isn't too long.

There is always the danger that increased unemployment could depress the private sector too.

With the international economic situation fragile to say the least, the Chancellor's current strategy is under pressure.

The government though says that Labour must bear the brunt of the blame for overspending when it was in office.

It says the economic situation would be even worse if it hadn't cut spending back.

But whoever's to blame, the North East's unemployment problem is certainly growing.