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The prodigious rise in the UK’s unemployment rate has recently led the government to intervene to make people either earn or learn. Britain’s government has set aside £1 billion to help the record number of unemployed nationals. Deputy Prime Minister Nick Clegg recently said that youth “contract funds” will help create internships and apprenticeships in the country.
A youth contract program, starting in April 2012, will provide 4.1m work places over three years for young people, including wage subsidies of 160,000 pounds for jobs and 250,000 pounds for work experience placements. Chancellor of the Exchequer George Osborne’s economic statement mentioned that there will be payments to employers to encourage 20,000 apprenticeships under the program.
Clegg said that unemployment is economic waste and a slow-burning social disaster. The Office of National Statistics said unemployment among youth aged 16-24 has flared up in an unusual fashion in recent years, reaching 1.02 million in the third quarter from 67,000, the highest level since recorded in 1992. Further the office said the unemployment rate in this category is 21.9 percent and has continued to be so from last year.
Unemployment in the UK is on the rise according to Office of the National Statistics which presented that there were total of 2.62 million are left unemployed in the second quarter, highest since 1994, and this has brought the unemployment rate to 8.3 percent in the UK, which has been a jolt to UK’s economic recovery.
According to Chris Williamson, Chief Economist at Markit, “Labour market data will raise concerns that the UK Economic recovery is fading away.” Three factors have played havoc in the UK: rise in unemployment, weak earnings, and ultimately, inflation. Due to the rise in unemployment, uncertainty in the job market and inflation, situations have been created where it looks like the incomes of the households have been squeezed.
Unemployment is the key element that provokes weakness in the economy and if inflation is accompanied for a considerable time, then this might potentially lead to stagflation. And perhaps there are chances of economic doddering in the short-term because of Euro Zone Crisis but this is not exhaustive.
According to the Organization for Economic Co-operation and Development (OCED), Europe is in recession and Britain will follow in 2012. OCED called on the Government to pump up resources to mitigate the impact of raising unemployment. The Government needs to consider easing the programme of fiscal spending cuts so as to revitalize and strengthen economy by the way of increasing public spending.