Record rise in number at work in UK

A record rise in the number of people in work has helped unemployment fall to a five-year low but Britain’s workers have been squeezed by a dramatic slowdown in pay growth.

The jobless rate dropped to 6.6% in the three months to April, a level it has not equalled since January 2009, figures released yesterday showed.

UK chancellor of the exchequer George Osborne hailed the progress as an important step towards the goal of full employment, while chief secretary to the treasury Danny Alexander said: “Britain is bouncing back.”

But the opposition Labour party and unions pointed to the continuing “cost-of-living crisis”, as the figures also showed that pay growth slumped to just 0.7%, sharply down from 1.7% the month before and well below inflation, running at 1.8%.

Economists suggested the squeeze, which means real-terms pay packets are still falling, would offset pressure on the Bank of England to hike interest rates, which might have been caused by the better headline jobs picture.

Employment rose by a record 345,000 in the period to 30.54 million, the Office for National Statistics said. It was the steepest rise since records began in 1971.

It means 780,000 jobs have been added since a year earlier, the biggest annual rise since 1989. Unemployment fell by 161,000 to 2.16 million in the three months.

Prime Minister David Cameron said two million private sector jobs had been created since the start of the coalition. The figures showed these were up from 22.83m at the end of June 2010 to 25.13m by the end of March.

Martin Beck, senior economic advisor to the EY ITEM Club, said the jobs market “looks set to continue advancing”.

“However, for the recovery to truly hit home, pay packets need to start growing again,” he added.

Alan Clarke, of Scotiabank, said the low wage growth figures meant the chances of an interest rate hike being brought forward to this year had “suffered a big blow”.