Good news! Jobless rate hits 48-year low

BRITAIN’S unemployment rate has fallen to a 48-year low after the post-pandemic rebound helped thousands into jobs.

The rate dropped to 3.6 per cent between May and July, its lowest level since 1974 – meaning just 1.2million adults are now out of work.

At the same time, the number of filled jobs in the UK hit an all-time high of 35.8million – the first time this rate has climbed above pre-Covid levels since the pandemic struck two years ago.

But while the record-low rate of joblessness means many households will have wages to support them through the cost of living crunch, there are fears the labour market is beginning to cool.

And wages, meanwhile, are failing to keep up with inflation.

Office for National Statistics figures found average weekly earnings were up 5.5 per cent in the three months to July compared to the same period a year earlier.

‘Tough decisions about staffing levels’

But in real terms, workers were on average 2.8 per cent worse off.

Jake Finney, from PwC, said: ‘Workers are seeing their real pay fall at almost the fastest rate this century. Our analysis suggests this squeeze on living standards will continue to tighten, with real wages potentially around 5 per cent lower than their 2021 levels by the end of 2022. This means that the average worker will be around £30 worse off a week and £1,400 worse off a year.’

Danni Hewson, a financial analyst at AJ Bell, said: ‘Behind the headline figures there are signs that the booming jobs market is feeling the strain of the current economic crisis. Vacancy numbers experienced the largest quarterly fall since the same period two years ago after the first lockdown sent shockwaves through the labour market. Some companies are freezing recruitment and smaller businesses in particular have been having to make tough decisions about staffing levels.’

As the Bank of England tries to get a grip on the cost of living by hiking interest rates to encourage saving, it runs the risk of sparking higher unemployment as businesses resist investing in employees.

Job vacancies have hit record highs over the past year as firms struggled to find staff after reopening post-lockdowns. But the latest figures showed vacancies fell by 34,000 in June to August compared to the previous three months, to 1.3million – the largest drop since summer 2020.

But there are worrying signs beneath the surface, with a sharp rise in the number adults too sick to work. The number of ‘economically inactive’ workingage people – who have no job and are not looking for one, because they are students, have a long-term illness or are taking a career break – is up around 600,000 on pre-Covid levels.

The ONS data showed a large chunk of this was due to longterm sickness, which has jumped to its highest level on record at 2.5million people, or 5.9 per cent of the working-age population. This appears to have been driven by long Covid, mental health, and long NHS waiting lists for treatment.