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Economy: Unemployment reaches five-year low but squeeze on incomes continues

11:25 11 June 2014

The unemployment rate has reached a new five-year low, official figures showed today.

The unemployment rate has reached a new five-year low, official figures showed today.

PA Archive/Press Association Images

The UK unemployment rate has fallen to a five-year low following a record increase in employment in the three months to April, according to official figures out today.


Total unemployment fell by 161,000 to 2.16million, representing a jobless rate of 6.6% − its lowest since the three months to January 2009.

Employment rose by 345,000 in the three months to April to 30.54m, the data from the Office for National Statistics showed, the biggest increase since records began in 1971.

It means 780,000 jobs have been added since the same period a year earlier, the biggest annual rise since 1989.

The narrower count of those eligible to claim the Jobseeker’s Allowance fell by 27,400 in May to 1.09m on a seasonally adjusted basis, and by nearly 52,400 in total.

However, a dramatic slowdown in pay growth, to 0.7% from 1.7% a month earlier, dented hopes of a return to real-terms growth in incomes, with the new figure well below the current inflation rate of 1.8%.

Suffolk and north Essex followed the national trend, with claimant counts falling across the board.

The biggest reduction in Suffolk came in the Waveney district where the total of 1,790 was 218 lower compared with April, cutting the local unemployment rate by 0.3 of a percentage point to 2.7%.

There were 0.2% falls in the rate in Ipswich, where the count fell by 152 to 2,704 (a rate of 3.1%), and in Mid Suffolk, down 75 to 607 (1.0%).

And elsewhere in the county the local rate was 0.1% down, including Babergh, where the count fell by 60 to 686 (a rate of 1.3%), Forest Heath, down 63 to 459 (1.2%), St Edmundsbury, down 116 to 934 (1.4%) and Suffolk Coastal, down 62 to 666 (0.9%).

In north and mid Essex, the largest reduction was in Tendring, where the count was 207 lower at 2,455 and the rate 0.3% down at 3.2%, followed by Colchester, where the count fell by 190 to 1,982 and the rate by 0.2% to 1.7%.

The local rates were 0.1% lower in Chelmsford, down 126 to 1,810 (a rate of 1.7%), and Maldon, down 37 to 585 (1.5%), while relatively smaller falls left the rates unchanged in Braintree, down 80 to 1,638 (1.8%), and Uttlesford, down 38 to 431 (0.9%).

Employment minister Esther McVey said: “As we build a stronger economy, businesses up and down the country are feeling increasingly confident about creating jobs, meaning many thousands more people are in work every day - ensuring a better future for them, their families, and for the country as a whole.”

Chief Secretary to the Treasury Danny Alexander added: “There can be no doubt that thanks to the hard work of millions of people and businesses across the country, supported by a Government that has made and stuck to the right decisions, Britain is bouncing back.”

However, shadow work and pensions secretary Rachel Reeves said: “While this fall in overall unemployment is welcome, working people are over £1,600 a year worse off than when David Cameron came to office and pay has fallen behind inflation.

“Thousands of people who work hard are struggling to make ends meet because of the Government’s failure to tackle the cost-of-living crisis and make work pay.”

Economists said that, despite the further fall in unemployment, the continuing pressure on incomes meant that the Bank of England still had considerable scope to delay any increase in interest rates.

Samuel Tombs of Capital Economics, said: “The latest UK labour market figures show that, while the unemployment rate is continuing to fall, there is still enough slack in the jobs market to prevent wage growth from picking up.”

This meant that while the fall in joblessness should in theory bring a rise in interest rates a step closer, the weakness in wages indicated more underlying spare capacity in the economy which would need to be used up first.



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