Jobless total lowest for six years

Unemployment has fallen to its lowest level for more than six years and pay rises have continued to outstrip inflation, figures have shown.

The jobless total fell by 58,000 between September and November to 1.91 million, the lowest since autumn 2008, while a record 30 million people are in work.

The number of people claiming jobseeker's allowance fell in December by 29,600 to 867,000, the 26th consecutive monthly cut, said the Office for National Statistics. Job vacancies have also reached a record - up by 19,000 to 700,000.

Average earnings increased by 1.7% in the year to November, up by 0.3% on the previous month. Pay started outstripping inflation at the end of last year.

Unemployment has fallen by 418,000 over the past year, although the latest quarterly reduction was the smallest since July to September 2013.

The jobless rate is now 5.8% compared with 7.1% a year ago. Despite the good news on unemployment, there was another increase in the number of people classed as economically inactive, up by 66,000 to more than nine million.

The total includes people on long-term sick leave, looking after a relative or who have given up looking for work.

Long-term unemployment has also fallen, down by 185,000 to 658,000 among those out of work for over a year, while the number of jobless 16 to 24-year-olds increased by 30,000 to 764,000 - the first quarterly rise since June-August 2013.

Prime Minister David Cameron said: "The drop in unemployment is welcome news. Behind the statistics are stories of people finding self-respect and purpose in life."

Work and Pensions Secretary Iain Duncan Smith said: "We have reached an important milestone in this country's jobs-led recovery - with unemployment falling below 6% for the first time in six years. Welfare reform has played an instrumental part in this.

"We know that British people want to work hard and get on, but all too often in the past the welfare state hindered rather than helped - thwarting ambition and killing off hope. We put an end to that and now the number of people claiming the main out-of-work benefits is the lowest for a generation, and there are record numbers of people in work.

"Thanks to our long-term economic plan, businesses are feeling confident about the future. Jobs are being created and salaries are rising, meaning that increasing numbers of people are feeling the security and hope for the future that comes with a regular wage."

Paul Kenny, general secretary of the GMB union, said: "The 'jobs factory' in Britain the Prime Minister talks about is creating mainly low-skilled, low-paid and precarious jobs that reflect economic growth linked to the growth in the population.

"GDP per head is still 3% below 2007 levels and is the reason most workers have seen little or no evidence of any recovery.

"The fall in oil prices is providing hard-pressed families with the first relief they have experienced since the onset of the recession nearly seven years ago."

Chief Secretary to the Treasury, Danny Alexander said: "Today's larger than expected fall in unemployment shows that our jobs rich recovery remains on track. We're continuing to buck the European trend with strong growth and record job creation, and with earnings continuing to outstrip inflation, the benefits of the recovery are starting to flow into people's wage packets.

"The two biggest risks to our recovery in the next few years are a lurch to the right with a single party Conservative administration hell bent on cuts for cuts sake, and a lurch to the left from a single party Labour government that would plunge Britain further into debt."

Business Secretary Vince Cable said: "Today we've had another set of encouraging employment figures, which show that the strong performance of the UK labour market has been broadly spread.

"This has led to an almost record share of the UK working age population being in work. Equally important is that we are now seeing above inflation wage increases for workers' pay.

"However there is no doubt that more needs to be done. Youth unemployment remains too high. That is why we will continue to encourage firms to invest in the UK and equip British workers with the skills they need to compete in the jobs market."

Prime Minister David Cameron said: "This is another strong set of figures showing more people in work, showing that our unemployment rate in Britain is now around half the level in the Eurozone.

"And of course behind these figures lie real stories of people who have been able to find a job, to get work, and to provide the security and stability for themselves and their families that I want for everyone in this country. It demonstrates that our long-term economic plan is working.

"Nine out of 10 of the jobs that have been created in the last year are full-time jobs and we are helping every family by cutting their taxes and making sure everybody can earn £10,000 before they pay any income tax at all.

"With an economy that is growing, a long-term plan that is working, more and more people able to find work, I believe we are delivering the security and stability for families that I want for everyone in our country."

Shadow work and pensions secretary Rachel Reeves said: "Today's fall in overall unemployment is welcome, but wages remain sluggish and working people are £1,600 a year worse off since 2010.

"The Tory cost-of-living crisis and the Tory low-wage economy has left millions of people who do the right thing, work and contribute struggling to make ends meet and pay the bills. David Cameron and George Osborne's failure to tackle low pay is making it far harder to get the deficit down with income tax receipts across the Parliament £70 billion lower than forecast in 2010.

"A Labour government will tackle the Tory cost-of-living crisis and the Tory low-wage economy by raising the National Minimum Wage to £8 an hour, ensuring more people are paid a Living Wage, getting more homes built and extending free childcare provision. We will get the next generation into work by boosting apprenticeships.

"Today's figures also show a worrying rise in youth unemployment. The Government should bring in a compulsory jobs guarantee to get young people into work."

David Kern, chief economist at the British Chambers of Commerce, said: "These figures again confirm that the UK labour market remains a key strength for the UK, but there are some areas of concern.

"Although employment is up and unemployment is down, the quarterly changes were the lowest since 2013, supporting the view that the UK economy may be gradually slowing.

"It is also disappointing that youth unemployment, after a long period of steady decline, increased between September and November 2014. While youth unemployment is markedly lower than a year ago we cannot ignore the fact that it remains consistently higher than the adult unemployment rate.

"The modest upturn in average earnings growth is a positive development - earnings are also increasing at a faster rate than prices and real living standards are improving.

"However, wage growth will only be sustainable if it is matched by increased productivity. Equally, earning increases remain below 2% and do not provide any justification for considering an interest rate rise. The focus of economic policy must remain on sustaining and improving economic growth."

The TUC's head of economics, Nicola Smith said: "After years of falling living standards, today's real earnings growth suggests that we may finally be starting to make up some of the lost ground. But at this rate of progress it will still be at least another parliament before wages are even back to where they were before the crisis. Households are still far worse off today than they were five years ago.

"There are now concerning signs that young people are being left behind, with long-term youth unemployment failing to improve. Far more must be done to ensure that young people are protected from the damaging effects of long periods out of work.

"With the IMF downgrading its UK growth forecast this week, it's far from clear that this is a recovery built to last. We need stronger, sustained growth in wages and a far better balanced recovery to ensure that living standards are protected in the years ahead."

Geraint Johnes, director at Lancaster University's Work Foundation, said: "Pay has been the focus of much attention in recent months, and, following last month's encouraging figures, total pay has continued to rise above the rate of price inflation.

"The latest data indicate that total pay is rising at a rate of 1.7%. The improvement over the last couple of months is largely due to the return of pay hikes in the financial sector - which, on the latest data is showing an annual rate of growth of some 2.6%.

"In manufacturing, where, over the early part of last year, there were signs of some tightening, the rate of pay increase has declined over recent months and now stands at 1.1%."

Matthew Whittaker, chief economist at the Resolution Foundation think tank, said: "The return of real wage growth is very welcome for workers after six years of falling pay. Sharp falls in the price of oil and generally subdued inflation should mean that real pay growth continues to build in the coming months.

"But, while falling oil prices are clearly providing a fillip to consumers, it's not clear what will happen over the medium term. In preparation for a return to target inflation of 2% at some point, it's vital that we see significant and widely shared rises in nominal wage growth through 2015.

"Pay has been picking up, but it remains a long way short of the level we'd expect to see during normal economic times. Without this rebound we are unlikely to make up the lost ground on wages much before the end of the decade."

Chris Jones, chief executive of the City & Guilds Group, said: "Any fall in unemployment is good news, and no doubt these figures will give David Cameron a confidence boost, following his full employment pledge earlier this week.

 

"However, too many young people still can't get on the job ladder, and more experienced workers are struggling to take that next step in their careers. It will take a lot more than bold political promises to fix that.”