UK unemployment falls to 2.47m

UK unemployment fell 0.1% to 7.8% period up to May this year, according to he Office for National Statistics. Thus 2.47m people were out of work between March and May, 34,000 less than the previous quarter.  This is encouraging, but does not reflect forthcoming cuts in the public sector.

The employment rate for was 72.3%, or 28.98m. This means 160,000 more people obtained over the period. It is always worth remembering that this means around 11 million people of working age are not in employment.  Around a third of these 11 million are on some form of benefit, such as Incapacity Benefit or Income Support, whereas the rest are accounted for by students, homemakers, early retirees and the like.

The UK labour market has picked up then, but will private sector hiring pick up enough to offset the public sector cutbacks?  Also, many private companies who are reliant on Government contracts will be feeling the effects of the cuts too.

The recent rise in employment was due to a growing number of self-employed and part-time workers, suggesting that employers are still nervous about the outlook. But the high rate of unemployment seems to be putting pressure on pay growth, with growth of average earnings falling from 1.7% to 1.4% in May. It appears that in the future, more of us will have to work harder and for less generous pay than we have been used to.