Britain's army of unemployed number almost 2.5 million, the highest in almost 15 years, with almost one million younger people out of work.

While shocking by many standards, the figures released by the official statisticians yesterday were, if anything, slightly better than had been expected. The unemployment rate stands at 7.8 per cent, up from 5.4 per cent this time last year, or around 750,000 more out of work.

A more worrying trend is the emergence of an increasingly large group of the hidden unemployed – totalling more than 1.6 million – who are being pushed into taking shorter hours, temping or going into part-time work in an attempt to avoid the dole queues.

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Data released by the Office for National Statistics yesterday showed that another 220,000 joined the ranks of the unemployed in the three months to June 2009, taking the total to 2.4 million. However, the number of people claiming unemployment benefits, the "claimant count" has shown a moderating trend; still upwards, but at a slower pace than in recent months, suggesting that the rate of growth in joblessness is moderating, at least for now. An extra 25,000 people claimed job seeker's allowance in June, taking the total claimant count to 1.6 million.

The news came as the Governor of the Bank of England, Mervyn King, indicated that the economic recovery, which may already be under way, will be so feeble that few people will notice the difference between the coming upturn and the previous recession. He said the challenge of fixing the "fragile" banking system meant that Britain is condemned to a "slow and protracted recovery" he said.

There are now 928,000 jobless young people, and 472,100 18 to 24-year-olds claiming jobseeker's allowance. Martina Milburn, chief executive of The Prince's Trust, commented: "Youth unemployment now costs the state £3.4m per day in jobseeker's allowance. But this is just the start of a long and downward spiral, which all too often leads to crime, homelessness or worse." Millions of school leavers and graduates will inflate the total still further over the summer.

Most economists expect the unemployment total to rise to over three million by the time of the next election.

Figures released by the bank of England and the ONS yesterday indicated a growing number of what might be dubbed the "shadow unemployed," backing anecdotal evidence that the UK's liberalised labour market has both helped keep the official jobless totals low, while pushing many into a twilight world between traditional jobs and casual, insecure and poorly paid work. Pay rises in this recession, for example, are much lower than in previous ones, which Mr King said yesterday had helped save jobs, at least temporarily: "There is some evidence that real pay has been more flexible and that has enabled employment to stay stronger than would have been the case had we been back in the days of the late 1970s and early 1980s."

The Bank of England also estimates, for example, that some 223,000 people are working short hours at the moment "for economic reasons," that excludes those choosing to do so to bring up a family, say, or care for someone. That number has been greatly inflated by the recession, almost doubling since 2008. The ONS' labour market statistics also reveal that there are 426,000 people currently temping because they cannot find a permanent position, up by a quarter on this time last year; and a further 964,000 working part-time who say they are seeking full time posts – up 40 per cent on a year ago. There has also been an increase in the number of people declaring themselves students and self-employed, some of whom may, in reality, be practically speaking unemployed. The fact that none of these groups are eligible for benefits also means that they remain away from the claimant count numbers, which have generally been more optimistic. There is also the professional made redundant who finds themselves in casual bar or café work, for example – a sort of "barrister to barista" phenomenon – to consider.

Susan Yallop, a director of Adecco, the employment agency, explained: "As the job market continues to alter, so too must candidates, their expectations and their approach to seeking employment; the key is flexibility. This means that candidates might need to be willing to broaden their horizons and consider jobs that may fall outside of their original target."

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'I was even turned down for a job at McDonalds'

The lawyer who can't find work as a temp: Paul Singh

Paul Singh, a 35-year-old Londoner, got a law degree from Queen Mary's University and later trained as a barrister. He was made redundant from his £60,000 a year job at a London recruitment firm six months ago and has since been too "over-qualified" to find a new job, even at McDonald's.

"In my last job, I managed three junior consultants and was answerable to the managing director. Now prospective employers tell me I'm too senior to employ. I used to earn £40,000 per year minimum. That made £60,000 after bonuses. Now I am looking at temporary jobs which are offering £6.50 per hour. I even applied to McDonald's and they turned me down. But I am optimistic. From what I hear, things could be starting to turn. Companies have seemed reluctant to release any cash they had because they were worried about the wider economic situation.

"Somebody must require staff somewhere, the problem is that there is so much competition and firms are looking for very specific types of experience. Even then, many are employing the cheapest option, regardless of experience."

'My earnings have halved but I won't go on the dole'

The manager who became a temp: Maureen Yole

Maureen Yole was once responsible for outsourcing more than 200 temporary jobs to employment agencies, now she is struggling to get work through one herself.

The 51-year-old, from Manchester, was earning about £30,000 a year before she took a voluntary redundancy package.

Now, she said, she is willing to accept work for less than half of that figure.

"My salary, after bonuses were added, was more than double of some of the pay cheques I am willing to look at now – around £9 per hour," she said.

"I hope Adecco will be able to place me in a similar position to my old job but I am realistic and I don't think it will happen. The most important thing for me is not to go on to benefits.

"I was employed by a large American firm in December 2007 when they decided they needed a presence in the UK. I was given a building site and told they needed a fully functioning office.

"I was responsible for recruitment of staff. I used to use Adecco to find temporary staff, now I am signed up with them myself."

'It's monotonous work and the pay is far lower'

The engineer who became a temp: Jessica Burke

Equipped with two engineering degrees, Jessica Burke graduated with a £28,000 job offer designing IT systems and programming robotic arms on car production lines. Six years later, she is temping for less than £14,000 a year.

"My generation entered into a buoyant job market. My peers were able to land jobs where we could earn up to £35,000 a year.

"The economic boom allowed me to move quickly into a project management role, eventually starting my own business as an IT and engineering consultant.

"I could earn anything up to – and even above – £50,000. But towards the end of last year you could sense the downturn. Work started drying up and there was a notable lack in start-up businesses that required my services.

"Now I'm doing a fairly monotonous admin and data-entry role. The pay is far lower than when I first temped 13 years ago. When I'm interviewed for temp roles, people are quick to judge me as overqualified or unsuited. That said, there are few experiences that build character and make you truly understand the value of money."