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Unemployment figures have dropped 'to lowest rate since before 2008'

Feb 25
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Unemployment figures have dropped 'to lowest rate since before...

The number of people that are currently unemployed has dropped to its lowest level since before the global financial crash in 2008, with 30.9 million in work, according to new data.

Figures from the Office for National Statistics (ONS) also reveal that the amount of women in employment has hit a record high of 14.47 million, with the percentage of those out of work falling to 5.7 per cent - its lowest rate since May 2008.

Sluggish pay growth

While data from the ONS clearly demonstrates that the labour market has strengthened, pay growth has remained relatively stagnant for the majority of UK workers. Wages increased by around 2.1 per cent, including bonuses, and by just 1.7 per cent, excluding additional payments, compared to 12 months ago.

In the last quarter of 2014, youth employment has fallen from 19.9 per cent to 16.2 per cent compared to the same period in 2013, but this has still been consistently higher than the joblessness rate for their older counterparts.

Commenting on the ONS figures, Gerwyn Davies, labour market advisor for the Chartered Institute of Personnel and Development (CIPD), said: "Employers’ appetite for taking on workers shows no sign of abating. This is reflected in the record number of people aged 16 to 24 in work.

"Apart from the modest increase in redundancies, all of the employment indicators are moving in the same positive direction. It’s good to see that more people are getting into work, but the focus must now shift to what is happening to those people once they are in work."

Mr Davies believes that young workers could help relieve the problems surrounding the current skills shortage the UK is experiencing. He said that to improve productivity, organisations need to examine how they are developing their employees' skills.

"Until this issue is tackled, performance and pay will continue to suffer," he continued.

According to the latest CIPD Labour Market Outlook, the pay divide between employees working for firms that can afford to increase wages by two per cent or more and those that are freezing pay until further notice.

Record number of vacancies

According to the figures from the ONS, there are now almost 720,000 job vacancies available in the UK, marking a record high. Iain Duncan Smith, secretary of state for work and pensions, believes that this achievement goes hand in hand with the reformed welfare system, mentioning specifically the recently rolled out Universal Credit scheme.

He also commended on the government's work in dropping the rate of inflation to a record low of 0.3 per cent in January, adding that wages have risen at a faster rate than prices, "meaning more money in people’s pockets".

However, Jim Hillage, director of research at the Institute for Employment Studies, believes that while demand for labour remains robust, there are big indicators that supply is failing to keep up with this rising appetite.

He added that unfilled vacancies have grown significantly, while the number of people chasing each job has fallen from an average of 2.6 to more than five in 2013.

"The strong demand for labour can also be seen in the rise in average earnings, which are now increasing far faster than prices. Both these are portents of increasing skill shortages which could hamper economic growth in the months ahead," Mr Hillage continued.

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