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UK jobs market continues to expand

UK unemployment dropped by 14,000 in the final quarter of 2012, despite the fact that the economy contracted, official figures showed today.

The latest labour market report from the Office for National Statistics (ONS) shows that the unemployment rate in October to December 2012 fell to 7.8%, from 7.9% in the previous quarter.

Work and Pensions Secretary Iain Duncan Smith welcomed the further decrease in the number of long-term unemployed, with 15,000 fewer people unemployed for more than one year.

During the period there were 29.73 million people in the UK in employment – the highest since records began in 1971. Employment rose by 154,000 compared with July to September 2012 and by 584,000 against the same quarter a year earlier.

More people were working in full-time jobs at the end of last year. Between October to December 2011 and the same period in 2012 there was a rise of 394,000 in the number of people working full-time hours, the largest annual increase since 2005. Nevertheless, the total is still below the level of full-time employment seen before the 2008-09 recession.

Of all those in employment in the fourth quarter, 73% were working full-time and 27% were working part-time hours.

Reflecting job losses in the public sector as part of the government’s spending cuts, the number of people employed in the public sector stood at 5.75 million in September 2012, down 24,000 from June 2012. This decrease was more than offset by an increase of 65,000 in the number of people employed in the private sector in September 2012, which rose to 23.86 million.

Although the number of people in work is continuing to rise, John Philpott, chief economist at the Chartered Institute of Personnel and Development, pointed out that the economy is effectively using more people to produce the same level of output. “That is called falling productivity,” he stated.

In terms of pay, the ONS highlighted the fact that inflation remains higher than pay increases, which means that the real value of pay is continuing to fall. The annual growth in weekly wages has been below inflation since the middle of 2008, the statistics agency said.


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