UK unemployment falls for first time in nearly two years

The Government was given some welcome news on the jobs front today when unemployment fell for the first time in almost two years and fewer people claimed jobseeker's allowance.

The number of people out of work in the three months to November was cut by 7,000 to 2.46 million, although the rate remained unchanged at 7.8%.

The claimant count fell for the second month in a row in December, down by 15,200 to 1.61 million, the biggest monthly fall since April 2007.

The number of unemployed people is more than half a million higher than a year ago, today's data from the Office for National Statistics showed.

Other figures revealed a 16,000 fall in the number of 16 to 24-year-olds out of work to 927,000, a jobless rate of almost 20%.

The news was not all good, with the number of people in work falling by 14,000 over the latest quarter to 28.9 million, the lowest figure since last summer.

Long-term unemployment - those out of work for more than a year - increased by 29,000 to 631,000, the highest figure since 1997.

The number of people classed as economically inactive, including people who have taken early retirement or have given up looking for work, increased by 79,000 in the three months to November to reach a record high of 8.05 million, 21% of the working age population.

The rise was largely driven by an increase of 81,000 in the number of students not looking for work to reach a record high of 2.24 million.

Today's figures revealed a fall of 113,000 in the number of people in full-time jobs, to 21.21 million, compared with a 99,000 increase in part-time workers to 7.71 million.

Public sector employment increased by 23,000 to 6.09 million between June and September last year, while private sector employment rose by 29,000.

There were 30 million jobs in the economy last September, down 127,000 over the quarter, with the biggest fall in construction, although vacancies rose by 16,000 to 448,000.

Average pay increased by 0.7% in the year to November, up by 0.1% from the previous month.

Wage deals in private firms fell by 0.1% but increased by 3.8% in the public sector.

Average weekly pay was £451 last November, an increase of 0.7% on a year earlier.

Excluding bonuses, average pay was £424 a week, 1.1% higher than a year ago, the lowest annual growth rate since records began in 2001.

Work and Pensions Secretary Yvette Cooper said: "The jobs market is still tough for a lot of people, but the drop in unemployment and youth unemployment is very welcome.

"It means 450,000 fewer people are out of work than everyone expected last spring.

"The extra investment in jobs, education and training is making a real difference, helping people through the recession and preventing the kind of unemployment we saw in the Eighties and Nineties.

"However, we know that things will still be difficult and unemployment is still likely to rise over the next few months. That is why we are determined to keep increasing the help and support to get people into jobs and training."

Employment Minister Jim Knight said: "These figures show the largest number of people coming off unemployment benefit for 15 years, which is a sign that our £5 billion investment to get people back to work is having an impact.

"The fact that tens of thousands more young people are taking up the Government's guarantee of a place in education or training means that they are getting the valuable skills they need to get into work.

"New figures published today show that more than 25,000 people have benefited from the new Six-month Offer, while the sixth round of winning Future Jobs Fund bidders will create almost 6,000 more jobs for young people.

"This brings the total number of successful bids to create jobs through the fund so far to almost 104,000. This is in addition to more than 400,000 people who have been helped into jobs through the jobcentres' local employment partnerships."

Paul Kenny, general secretary of the GMB said: "We may be turning the corner on unemployment with a fragile recovery but those without jobs and young workers are paying a very high price for this bankers' recession.

"The multi-millionaire elite who run the finance sector have resumed gorging themselves with bonuses as if nothing had happened.

"Like the untouchable and unaccountable landed aristocratic elite before them, their grip on political power will have to be similarly ended. This must be an issue at the general election.

"In recent months, the Governor of the Bank of England has taken it upon himself to comment on fiscal policy and he is now calling for cuts in public services, which is not his remit.

"Given the fragile recovery under way, Parliament should take full responsibility for both monetary and fiscal policy and the Governor, who abysmally failed in his banking regulatory role, should be put out to grass."

Martina Milburn, chief executive of youth charity The Prince's Trust, said: "We welcome any fall in youth unemployment levels, but it is too soon to be complacent.

"One in five young people young people are still struggling to find a job. Britain is in danger of losing a wealth of young talent if we fail to help them into work."

John Wright, chairman of the Federation of Small Businesses, said: "While we welcome the fact that the figures show that unemployment has fallen, this trend needs to continue over the coming months.

"The figures show that more people than ever before are working part-time and are trying to find full-time employment.

"For the economy to grow, this needs to be made a reality. The run-up to Christmas is a busy time for any business and many small firms, especially in the retail sector, will have taken on seasonal staff to help them through the busy Christmas period.

"However, small businesses need help to make these seasonal jobs into permanent jobs and the Government must lend a helping hand if small firms are to really tackle the challenge of rising unemployment."

TUC general secretary Brendan Barber said: "Today's unexpected fall in youth unemployment is very encouraging and shows Government action is working, but with nearly a million young people still out of work, there's a long way to go before we can talk about a healthy jobs market.

"The first fall in overall unemployment since the recession started shows that Government investment is the best way to secure a sustained economic recovery. Cutting back on spending now could still unleash a double-dip recession and send unemployment soaring.

"Long-term unemployment is still a huge concern, and it will continue to rise well after the recession ends. Long spells out of work can increase the likelihood of mental health problems and relationship breakdown, and devastate entire communities.

"A universal job guarantee for anyone out of work for at least 12 months would give an unemployed person the best possible chance of a returning to work."

Liberal Democrat leader Nick Clegg used a new social media initiative co-hosted by the UK Youth Parliament to launch the party's youth jobs manifesto pledge today.

He announced the party's plans using Facebook, Twitter and YouTube, including proposals aimed at ensuring young people do not spend more than 90 days on jobseeker's allowance before they get more training, education, an internship or a place on a work programme.

Mr Clegg said: "Young people feel cheated by this recession. Everyone knows someone who has recently left college or university with hopes of starting a career only to find they cannot even get on the lowest rung of the job ladder.

"We must help them now or they will be left behind in any recovery.

"Our promise of more training, education, an internship or a place on a work programme will give hope to the nearly one million young people who currently can't find a job.

"Facebook, YouTube and Twitter play just as important a role as TV or newspapers in young people's lives. Politicians can't ignore new and social media if they want to connect with the next generation of voters."

David Kern, chief economist at the British Chambers of Commerce, said: "The welcome fall in unemployment raises hopes that next week's GDP figures will confirm that the recession is over. But the labour market figures also show that there was a fall in employment, and more significantly, the level of economically inactive people has increased.

"The gap between public and private sector wages has widened, reinforcing the need for a freeze in the total public sector pay bill as a key measure in battling the UK's unsustainable budget deficit. We cannot have a situation where public sector wages are outstripping those in the private sector.

"With wages overall increasing much slower than prices, there is clearly no need to tighten monetary policy in the near term."

Lee Hopley, chief economist at the Engineering Employers Federation, said: "Labour conditions appeared to stabilise across the economy towards the end of last year and, following sharp cuts earlier in the year, the pace of manufacturing job losses has also continued to slow.

"However, we are likely to see continued pay restraint in the coming months and any turnaround in employment is likely to lag some way behind a return to growth in the economy."