Devastation of the jobs apocalypse revealed: It's about to get worse, says City guru ALEX BRUMMER - these are the flashing warning signs... and the incompetence that's caused it
There can be no better evidence of the sheer economic incompetence of this Labour government than the relentless growth in unemployment and idleness since it took office in July last year.
Keir Starmer and Rachel Reeves' much-repeated mantra that they are on the side of 'working people' has been shattered by the ongoing surge in sickness benefits and joblessness.
On every measure, they show the harm being done to the workforce – and to young people in particular – through the mindless and destructive policies of this government.
In the process, Labour is creating a lost generation of 16 to 24-year-olds.
Not that anyone should be surprised at the chaos. The uncertainty caused by Reeves and her acolytes in the ridiculously long build-up to the Budget, which finally came on November 26, was just one warning among many.
Today, unemployment stands at 5.1 per cent, a five-year high. New figures from HMRC show the number of company employees has plummeted by 194,000 since July 2024, with 38,000 jobs shed in the past month alone, mostly in the private sector.
Yet, over the same period, the public-sector workforce actually grew – by 62,000 to 6.2 million people – with an unreformed and unproductive NHS sucking in the greatest numbers.
Public-sector pay is similarly soaring. It climbed by a hefty 7.6 per cent in the three months to November, almost twice the average 3.9 per cent increase for those on private payrolls.
Labour is creating a lost generation of 16 to 24-year-olds, writes ALEX BRUMMER. On every measure they are harming the workforce
Despite the venomous criticism the Left directs at 'Tory austerity' and the effects of Brexit, the truth is our unemployment rate was a modest 4.4 per cent when Labour assumed office, one of the lowest among the G7 richest nations.
The jobs figures are not the only troubling data from the past few days. Figures from the Department of Work and Pensions show disability benefit claims are also rising.
A jaw-dropping 700,000 people now enjoy welfare payouts linked to 'anxiety', depression or 'stress' – from a total of 3.9 million receiving Personal Independence Payments. Attention Deficit Hyper-Activity Disorder (ADHD) claims have shot up by a fifth in just one year.
Labour shows zero sign of getting to grips with this human catastrophe, not least because its own MPs refuse to listen to economic reality. Reeves, remember, was forced to retreat on plans to cut disability and sickness benefits after a backbench rebellion in the summer.
Faced with such grave problems, the lack of joined-up thinking in Whitehall is bewildering.
This disaster began with Labour's 2024 Budget, which imposed a record-breaking £40 billion-plus tax hike, a destructive jump in employers' national insurance at the heart of it.
A tax on employment, pure and simple, it brought the economy to a juddering halt. Again, this should have been no surprise: all the economic evidence shows that the greater the cost of employing people, the less likely it is jobs will be created.
So, how did Reeves respond in her second budget just a few weeks ago?
She smashed her promise that she would 'not come back for more' – and imposed an eye-watering £26.6 billion of additional levies.
Inevitably, this vast sum will be poured down the gullet of our bloated public sector, destroying any prospect of growth in the process.
It has been obvious Labour is intent on transferring ever more resources from wealth-creating private enterprises to our lumbering state sector, which is unreformed, crippled by low productivity and a drag on the economy.
Figures released only yesterday show the average number of sick days taken by civil servants jumped by five per cent in 2025, with an average of 8.2 days per person lost each year.
Yet, ignoring the dire lessons of the past 12 months, Starmer and Reeves are pressing ahead with still more job-destroying initiatives.
The flexibility of Britain's labour market is one of the reasons we have consistently kept unemployment lower than our European competitors – particularly among younger people.
But rather than play to such a proven strength, Labour has given us Angela Rayner's beloved Employment Rights Bill which, after months of political wrangling, has just overcome its final hurdles and will become law.
The Bill, a raft of contentious measures which grant generous new rights to employees, is seen as the death knell for our friction-free employment market and a further blow for jobs. It is also payback to the unions for supporting Labour's return to power.
Then there is Reeves's recent decision to impose another substantial rise in the National Living Wage.
Everyone wants Britain to be a high-skilled, higher-pay economy, but in our current circumstances, it is a luxury Britain cannot afford.
A rise in the minimum wage, as it was formerly called, is effectively another tax on those brave enough to hire new staff. Worse, it will penalise the chances of the same young people the government claims it wants to entice back into employment.
In truth, nothing is more worrying than the destructive impact of Labour's policies on the young and their prospects.
In the past three months alone, the unemployment rate for young people has climbed to 13.4 per cent.
Instead of pulling them from welfare to work, as it has promised, the government is forcing ever more young men and women on to state benefits – including a disturbing number claiming sickness payments on mental health grounds. Nearly one in four people out of work due to ill health is under 35.
Today, we have an estimated 946,000 young adults not in education, employment, or training – misery for them and an expensive calamity for everyone else.
At least – belatedly – the latest sickness and unemployment figures are concentrating minds.
Unemployment stands at 5.1 per cent - a five-year high - while 700,000 people now enjoy welfare payouts linked to 'anxiety', depression or 'stress'
The Bank of England's Monetary Policy Committee is expected to reduce the official interest rate when they meet today. Until now, the Bank's governor, Andrew Bailey, has held back from cutting the rate amid fears about Britain's stubbornly high inflation.
But a weakening jobs market – and a fall in private sector wage settlements – should tip the balance in favour of a cut from four to 3.75 per cent. It helps that inflation fell sharply from 3.6 per cent in October to 3.2 per cent in November.
Welcome news – so far as it goes. Sure, lower interest rates should make it easier for banks to lend to companies of all sizes and encourage mortgage lenders to drop their rates.
But a quarter of a percentage point reduction in the cost of borrowing will do little to ease the disastrous burden of Labour's £60 billion tax increases – or repair the business and consumer confidence that Rachel Reeves has shattered.
No doubt the Chancellor will boast we have the lowest interest rates for three years.
But the bigger truth is that Labour's incompetence – and that includes the gargantuan costs associated with its misguided rush for Net Zero – have kept rates artificially high for far too long.
Only now that the terrifying bogeyman of unemployment has returned do Bailey and the Bank feel they can grasp the nettle and ease the cost of borrowing.
What a sobering indictment of Labour's hapless and immoral stewardship of our economy.
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