Unemployment could rise by 200,000 in 2013, says thinktank

An extra 200,000 people in Britain may be without a job by this time next year, according to the thinktank IPPR, and youth unemployment may again rise above a million.

Although unemployment has been falling – the latest official figures may show another drop on Wednesday – IPPR analysis of Office for Budget Responsibility forecasts this week shows there may be worse to come next year.

Unemployment will not peak until 2014, says the OBR, and might not get back to where it is now until the end of 2015.

The official figures also indicate that much of the recent decline in unemployment has been caused by growth in part-time and self-employment, and there was also a summer boost to jobs from the Olympics. Youth unemployment has come down from its record levels but the rate remained high, nearly 21%, in the three months to September.

The IPPR's analysis, which is based on the pattern of the increase in 2011, a period of similar labour market change, shows that a further 86,000 under-25s may join the dole queues next year.

Long-term unemployment could rise by 32,000 to a total of 926,000. A further 47,000 people over 50 may also become unemployed.

The north-west may bear the brunt of job losses with an extra 64,000 people likely to be out of work in 2013, followed by 53,000 in London. However, unemployment may fall by 11,000 in the West Midlands, by 7,000 in Northern Ireland and by 2,000 in south-west England.

IPPR researcher Spencer Thompson said: "The outlook is especially bleak for young people and the long-term unemployed. Hundreds of thousands are at risk of permanent 'scarring' in the labour market: having their long-term outlook damaged by long periods of unemployment or by a difficult and patchy entry into the world of work.

"The government should guarantee a job, paid at the minimum wage or above, to anyone who has been out of work and claiming jobseeker's allowance for more than 12 consecutive months. If people do not want to take up this offer, they should be expected to find an alternative that does not involve claiming jobseekers' allowance."