Think tank urges ‘job guarantee’ to tackle ‘hidden crisis’ of long-term unemployment as almost a million people will have been out of work for more than a year by the end of 2012, according to new analysis by the think tank IPPR.

The think tank is today raising the alarm over the growing number of people who have been out of work for more than a year, which IPPR predicts will rise by another 107,000 by the end of this year to a total of 962,000, the highest since the end of 1995. If unemployment rises again in today’s statistics, as the Office for Budget Responsibility (OBR) predicts, it will be the tenth month in a row the jobless total has risen. The UK’s unemployment rate (8.4 percent) is already the worst for 17 years but the OBR says it will rise to 8.7 percent by the end of the summer. With a total of 2,666,000 people already unemployed, IPPR analysis published last week showed that another 100,000 people will be out of work by the end of the summer.

IPPR says that long-term unemployment is “the hidden crisis of the slowest ever economic recovery”. New IPPR analysis shows that if total unemployment is likely to peaks at 2.75 million and the proportion of those unemployed for more than a year is likely to go back up to the peak seen at the beginning of 2011. Total unemployment has increased by 148,000 over the last year and forecasters, including the OBR, say it will increase by another 100,000 before peaking in the summer. It is then expected to stay at this peak level until the middle of 2013. IPPR says in such a tough labour market, it is inevitable that many of the people who have lost their jobs in the last 12 months will struggle to find new ones and will eventually join the ranks of the long-term unemployed.

Tony Dolphin, IPPR Chief Economist, said: “Long-term unemployment is the hidden crisis of the slowest ever economic recovery in the UK. While the ‘Youth Contract’ is designed to help young people out of work for more than a year, the ‘Work Programme’ has only been able to secure employment for about a third of jobseekers on the programme. On current progress, just two-thirds of people out of work for a year will not get work in the following two years. Government policy is not keeping pace with joblessness.

“Unemployment is not going to fall until the middle of 2013 and the number of people out of work for more than a year is going to grow to almost a million the end of this year. The longer someone is unemployed, the less likely they are to ever return to work. Being out of work for more than a year can have a scarring effect, making it harder to get a job as well as having a negative impact on one’s health and well-being. This means that even when employment starts to pick up again, they will find it hard to compete with other jobseekers and could find themselves permanently shut out of the jobs market.

“The government should guarantee everyone who has been unemployed for more than a year a job at the minimum wage in local government or the voluntary sector. But with that right should come the responsibility to take that job or risk losing their benefits.” Overall, 855,000 people have been unemployed for more than a year – almost a third of all jobseekers; Almost half a million (428,000) people over 50 are now unemployed, up 37,300 in the last year; More than 40 percent of unemployed over fifties have been out of work for more than a year, up 14,600 from the last quarter to 185,000; IPPR North research shows the North of England has experienced a labour market double-dip over the last year while unemployment in the South East has remained below its recession peak. The North/South jobs gap is now wider than ever before. Two thirds of the rise in unemployment over the last quarter has hit women, with 22,400 more women out of work and 5,200 more men. More than a million women (1,126,000) are now unemployed, the second highest since for 25 years and a rise of 85,000 over the last year. Of those, over a quarter (27 percent) of women (308,000) have been unemployed for more than a year, a rise of 30,000 over the last year The Youth Contract has yet to make any impact on youth unemployment: More than a million (1,042,000) young people (aged 16-24) are now unemployed, the second highest since comparable records began in 1992, and a rise of 67,600 in the last year; 253,000 young people (aged 16-24) have been unemployed for more than a year. An increase of 24,900 over the last year. In the twelve months (to December 2011), public sector employment contracted by 270,000, while private sector employment increased by only 226,000. Although figures for the last three months are better – public sector employment down 37,000; private sector employment up 45,000 – the private sector is not creating jobs fast enough to offset the cuts in the public sector and the growth of the workforce. As a consequence, unemployment is increasing. This contrasts with the picture a year ago. Over the twelve months to December 2010, public sector employment contracted by 140,000, while private sector employment increased by 457,000.