Benefit claims rose by 37,100 to 1.56 million in June, the biggest rise since May 2009, numbers from the the Office for National Statistics show.
Unemployment, as measured by International Labour Organisation methods, climbed by 38,000 to 2.49 million people in Q2.
Recent employment surveys have shown that companies are scaling back hiring plans, raising doubts about the ability of private companies to make up for public sector job losses.
“Corporate restructuring programmes are having a real effect on unemployment,” says Andries Smit, founder of SME Discounts.
“The government wants new and small businesses to help by absorbing the unemployed workforce, but in a country where resourcing is so expensive and taxed, it’s highly unlikely. Startups and SMEs need to be given a real, tangible incentive to employ more people.”
Ian Brinkley, centre director at The Work Foundation, adds that it is likely that unemployment will further increase this year.
“The labour market recovery has come to a shuddering halt. The few new jobs created were largely temporary, and with so few new full-time jobs on offer, there was a big jump in the number of people forced to take part-time work. Even more worryingly, the rise in unemployment measured by the ILO definition was concentrated among some younger age groups.”