Employment levels have reached their highest level since comparable records began in 1971.
According to official labour market figures out today, the employment rate for people of working age was 74.9% for the three months ending in December 2004, an increase from 74.7% from the previous quarter. The last time the rate was higher was for the three months ending in August 1990.
The total number of people in employment is 28.52 million.
Despite the rosy figures, however, unemployment is also rising. The rate was 4.7% up from 4.6% the previous quarter, totalling 1.41 million an increase of 32,000 people. Regardless of the rise, the numbers claiming Jobseeker’s Allowance is the lowest since June 1975.
The inactivity rate for people of working age has also fallen. For the quarter ending December 2004 it had dropped to 21.3% down from 21.5% the previous three months.
Job opportunities are also on the rise. The average number of vacancies for the three months to January 2005 was 652,300, up 12,000 on the previous quarter.
Commenting on the figures Dr Philpott, Chief Economist at the Chartered Institute of Personnel and Development said:
“An employment rate close to 75% and underlying growth in average earnings of 4.5% indicates that the UK labour market is now operating close to full capacity.
“Although unemployment rose by 32,000 in the three months to December this was due to a large fall in the number of economically inactive people; more than 60,000 of these entered the labour market to take up or search for jobs. While an increase in the supply of labour is welcome, and might in due course ease wage pressure, there is a serious question mark over the ability of many available jobless people to fill the 650,000 vacancies currently on offer.”
Philpott warns that the result of a strong demand for labour and limited effective supply makes the labour market a clear upside risk to inflation and said that until wage pressure eases there will be no hope of a cut in interest rates.
A view shared by the Trades Union Congress leader Brendan Barber:
“The number of people who are unemployed has risen and manufacturing jobs are still being lost. These support the strong case for holding interest rates steady and the TUC will be looking for a concerted strategy to save jobs in manufacturing in this year’s Budget.”
