UNEMPLOYMENT rose to its highest rate in nearly five years with government intervention needed to prevent high regional rates spreading across the country, unions and experts warned today.

As 21,000 Job Centre staff began balloting for strikes, official figures showed Britain’s overall unemployment rate rose to 5.1 per cent over the past three months.

Youth unemployment is up to 13.7 per cent despite 16 to 24-year-old economic inactivity dropping from 32.8 to 29.7 per cent over the last year, the Office for National Statistics (ONS) revealed.

Economic inactive people include full-time students, retirees, carers, long-term ill or disabled, and those who have given up looking for work.

“For those actively looking for work, young jobseekers and people in London – where figures indicate the unemployment rate has climbed to 7.2 per cent – are facing the biggest challenges,” said Work Foundation think tank director Ben Harrison.

“As a key bellwether for the national economy, this is bad news for jobseekers in the capital and risks being replicated elsewhere without intervention.

“Worryingly for ministers, there are signs unemployment may not yet have peaked.

“With more people chasing fewer jobs, finding work is becoming harder – especially for those out of work for longer periods or at the start of their career.”

The figures also showed 35.7 per cent of unemployed and economically inactive 16 to 64-year-olds want to work, with the total rising by 385,000 to 3,863,000 over the past 12 months.

“Weak vacancy levels and fragile employer confidence mean jobseekers are facing an increasingly competitive labour market,” added Mr Harrison.

“Nearly four million workless people wanting a job should be a major opportunity for a government that came to power 18 months ago pledging to raise the employment to 80 per cent. 

“But delivering on that ambition will require concrete action to boost business confidence, drive investment and create more secure, flexible jobs across the UK in 2026.”

Average regular earnings growth meanwhile fell to 4.5 per cent in the three months to November, down from 4.6 per cent in the previous quarter and staying at the lowest since April 2022.

ONS director of economic statistics Liz McKeown said: “The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity.

“While there was a slight increase in vacancies in the latest period, the overall number has remained broadly flat over the last six months, following a long decline.

“Wage growth in the private sector has slowed to its lowest rate in five years while public-sector wage growth remains elevated reflecting the continued impact of some pay rises being awarded earlier than they were last year.”

The TUC urged ministers to tackle the “affordability crisis” by protecting and boosting living standards.

General secretary Paul Nowak called for further Bank of England interest rate cuts this year for firms to invest and households to spend more and warned: “Young people who are out of work must get the help they need. 

“Experience of real work is best way to help young people who are starting out. The new jobs guarantee can be a major step forward for those who cannot find work in the open labour market — but more places are urgently needed.

“Young people also need good secure jobs with decent prospects, including notice of their shifts and sick pay when they’re ill. This kind of security allows people to move into and stay in jobs rather than cycling between insecure zero-hours work and unemployment.”

The Public and Commercial Services (PCS) union began balloting nearly 50,000 Department for Work and Pensions (DWP) members on Monday.

PCS general secretary Fran Heathcote said: “Unless the government addresses the crisis of low pay at the DWP, it will not be able to tackle the growing levels of unemployment.

“The Prime Minister says the cost of living crisis is his number one priority but is driving down the pay of his own workforce.”

Work and Pensions Secretary Pat McFadden said that while the data showed 513,000 more people in employment year on year, it “highlights why we must go further, especially for our young people.”

He called on more employers to back the government’s Jobs Guarantee youth work placement scheme launching this month.