However, the BBC reported that economists are surprised by the ONS figures, which are higher than City predictions and reveal that approximately 300,000 more people have found work in the last year. Previous economic downturns have resulted in higher unemployment and a slower recovery in employment rates. Low wage increases of an average 1% per year are believed to have contributed to the current employment figures and with inflation at nearly 3%, this means that in real terms the average person is taking a pay cut of about 2%.
David Kern, Chief Economist at the British Chambers of Commerce (BCC), commented: “With employment rising and unemployment falling, the labour market remains an area of strength for the UK economy. There are some areas of concern, however. Long-term unemployment is up, and youth unemployment, while edging down, is still too high. But at a time when the government’s austerity plan remains in force and the public sector is shrinking, it is reassuring that the private sector is willing and able to create jobs.”
He went on to say: “The government and the Bank of England can do more to help businesses continue creating jobs. The positive measures announced in the Spending Review, such as providing more support for exporters and infrastructure projects, should be implemented as soon as possible, and further efforts are needed to increase the flow of credit to viable businesses.”