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Small drop in UK unemployment

The number of people out of work fell by 17,000 to 2.48m in the three months to February according to the Labour Force Survey measurement. The Office of National Statistics also noted that this represented a fall of 0.1 percentage point in the unemployment rate, to reach 7.8%.

However, the alternative measure of unemployment, the jobseeker’s allowance or claimant count, showed a rise of 700 in March to reach 1.45m, which is a negligible amount in statistical terms.

Many public sectors can expect the bad news later this year as government cuts begin to bite.

Although the number out of work fell by 17,000, the number in employment rose by 143,000 to reach 29.23m. This is not that much below the pre-recession peak of 29.56m which was noted in the three months to the end of May 2008. On the other hand, youth unemployment is still running out of control, with 963,000 16-24 year olds now out of work, a rise of 12,000 over the previous quarter.

Chris Grayling, the Employment Minister, though that the figures were a “step in the right direction”, but the odds are they will not be stepping in that direction for much longer. As Howard Archer, chief economist at HIS Global Insight was quoted as saying: “Major job losses will occur in the public sector as the government slashes spending, and we doubt that the private sector will be able to fully compensate for this.” His organisation predicts a rise in unemployment to 2.67m at the end of this year, which will peak at 2.75m in 2011.

The ONS also noted that average earnings grew by only 2% in the year to February, and earnings excluding bonuses were up by 2.2%. This compares with the latest consumer prices index of 4.0% and shows that there will be a continued fall in real incomes as a result of the slackness in the labour market.

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Posted in Employment, unemployment

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