8 Jun 2010

Treasury explains why fewer jobless than it forecast

8:22 pm on 8 June 2010

The Treasury has offered its explanation of why unemployment during the recession didn't hit the heights it forecast.

It expected unemployment to hit 8% of the workforce but official figures fell well short of that mark.

Instead, unemployment peaked at 7.1% of the workforce at the end of last year and is continuing to fall.

Treasury says its forecast was based on previous recessions when job losses more closely matched falls in production.

But it says a more flexible workforce meant firms found it easier to cut costs this time around without axing jobs.

And Treasury says weak wage growth going into the recession meant companies' wages bills weren't as high as in previous downturns.