The Institute of Directors (IoD) came under fire from left and right as it reacted to the news that joblessness had gone up for the first time in months, rising by 21,000 to 1.7m.
The IoD – which represents more than 30,000 company directors and business leaders – said in a press release that “rising unemployment could be a good thing if it means more people are looking for work”.
Its remarks came as Work and Pensions Secretary suggested that the spike in the jobless stats today were down to fears of “Brexit” and firms holding off hiring until after the EU referendum on June 23.
Former Tory chancellor Norman Lamont once sparked a huge political outcry when he famously declared in the 1990s that the recession and unemployment had been “a price worth paying” to keep inflation down.
A Labour spokesman told HuffPost UK: “Unemployment can never be seen as a good thing for anybody.
“The Institute of Directors obviously has no concept of what hardship unemployment brings to individuals and families.”
And Shadow Work and Pensions Secretary Owen Smith told HuffPost: “Rising unemployment is never a good thing and this latest worrying increase reveals the fragility of any recovery in our economy.
“It also goes to show how unwise it was of Stephen Crabb to press ahead with his cuts to Universal Credit last week, making life harder for millions of working families just as the jobs market gets tougher for them.
The IoD, which strongly supports the EU ‘In’ campaign, also faced criticism from Eurosceptics for its remarks, with pro-Bexit novelist Allison Pearson tweeting ‘FFS!’
The row started when the business group sent out a press release reacting to the rise in unemployment.
James Sproule, its Chief Economist, suggested that the simultaneous rise in both employment and unemployment was not as contradictory as it might seem.
“The UK economy continues to power ahead, with the rise in employment and unemployment showing that employment is buoyant enough to attract the long-term inactive back into the job market.
“Getting people who have fallen out of the labour market looking for work again, combined with migrants bringing their skills here, is a key part of the UK’s continued economic expansion.
“These figures will no doubt be pored over in an attempt to discern effects of the EU referendum, but how employment would fare in the event of a Brexit vote is an open question.”
New Work and Pensions Secretary Stephen Crabb appeared to point the blame for the rising unemployment at the uncertainty caused by fears the UK would vote to quit the EU.
“There are big question marks hanging over the British economy because of questions about our status in the EU,” he told the BBC.
The IMF, London School of Economics and the FT have all suggested that firms are holsteding back on hiring new staff until after the June 23 referendum.
The IoD said that its economist’s argument wasn’t that unemployment was a price worth paying “but that people moving from inactive to unemployment was a sign of strong labour market”.
A No10 spokesman said that he had not seen the business body’s remarks. But he added: “clearly it’s disappointing to see a rise in unemployment.”
Downing Street denied Mr Crabb had been “directly” linking the spike in joblessness with Brexit but said he was repeating worries from figures such as Bank of England governor Mark Carney about signs in the economy.
Author: Paul Waugh