July 17, 2008 | posted by Michael Baxter in Employment, UK economy |

You will recall that the Halifax and Nationwide keep saying how the strong labour market will protect house prices. Yet, consider this.

The latest data from the Office for National Statistics, out yesterday, revealed the biggest rise in the claimant count since 1991. All in all, unemployment, or at least the claimant count, rose 15,000 in June, taking the cumulative rise this year to 45,000.

Mind you, employment is still rising. So, as ever with statistics, you can read good or bad into the data, depending on your inclination.

But then again, increases in the growth of employment have been falling for four quarters in a row.

But this is the figure to really get the alarm bells ringing.

Capital Economics reckons unemployment may have risen by 900,000 by 2010.

But what about this wave of public sector strikes? What effect will that have?

Capital Economics says: “We think that comparisons with the 1970s are overdone. Not only is industrial action now only really prevalent in the public sector, but the dire state of the Government’s finances suggests that it is unlikely to give into demands for higher pay. Meanwhile, the fact that unemployment is now rising fairly sharply should keep a lid on pay growth in the private sector.”

We would agree. The labour market is much more flexible these days. Jobs are under threat. In the 1970s the miners could go on strike, and we ended up with power cuts, and working a three-day week. That can not happen today.

One can have sympathy with public sector workers desperately trying to make ends meet. But if they lose their jobs, they will find it even harder to pay the bills.