Leading article: There is hidden hardship lurking behind these figures

Yesterday's unemployment numbers provide little reason for cheer

Government ministers grasped yesterday's unemployment numbers to their collective bosom, heralding the stabilisation as a sign of an improving economic outlook for Britain. But look more closely at these statistics and a much less comforting picture of the jobs market emerges than implied by the headline figure.

The young are still suffering disproportionately from this downturn. Around 20 per cent of 16-24 year olds are jobless at a time in life when a prolonged spell of unemployment can be tremendously damaging. And even within this dreadful statistic there appear to be brutal inequities. Around half of black 16- to 24-year-olds are now unemployed, according to a survey by the Institute for Public Policy Research. So much for the recent assertion of the Communities Secretary, John Denham, that race has diminished as a factor when it comes to economic opportunities in modern Britain.

There is another compelling reason why concern, rather than relief, should be felt on reading these latest figures. The reason for the fall in the headline number of unemployed is not that plenty of new jobs are being created, but a shift in the pattern of employment. These figures show a dramatic rise in the number of part-time jobs, an extra 99,000 in the three months to November. The individuals might still have a job, but their income has dropped substantially.

There is, to be sure, a bright side to this trend. For unemployment to have peaked at 7.8 per cent of the workforce here in Britain is certainly preferable to the 10 per cent rate presently seen in the United States and much of Europe. In previous British recessions, joblessness rose above 3 million. Today it has levelled out at 2.46 million. Some 450,000 people are in work today thanks to this discrepancy. And even if people are working part-time, it is better for them to keep in touch with the labour market where they can retain skills and avoid an all-too-common spiral of damaged self-esteem and depression.

And the Government can certainly take some credit for the fact that unemployment has not reached the highs of previous recessions, not least because of its decision to maintain public spending through the downturn. If the Government had joined the private sector in laying off workers (a course which some advocated), the employment figures would be significantly worse.

But the bigger point is that there is nothing in this trend that implies an economy springing back vigorously from recession. Nor, with millions still fearful for their jobs or in receipt of lower incomes, is robust consumer spending likely to be one of the engines pulling us back to decent growth, as it has done in the past. And though unemployment levels have not hit the levels that some feared, they are, as the Bank of England Governor, Mervyn King, pointed out in a speech this week, still well above what we have grown accustomed to.

There is further pain to come. The size of the budget deficit means that a squeeze in public sector spending is inevitable at some stage. The day is approaching when the Government will no longer be a net job creator. The nightmare scenario, as far as the jobs market is concerned, is that this squeeze will begin before the private sector is able to take up the slack. If yesterday's figures were a comfort blanket, it was made of material too thin to keep out the bitter wind.