UK unemployment dropped back to its pre-pandemic level at the start of 2022, but the country’s employment rate stayed flat as large numbers of people chose to leave the workforce despite record levels of vacancies.
The jobless rate averaged 3.8 per cent in the three months to February, returning to lows last seen in 2019, the Office for National Statistics said on Tuesday. However, there was no increase in the proportion of the adult population with a job, leaving the employment rate unchanged at 75.5 per cent and well short of its pre-pandemic level.
Instead, the inactivity rate rose 0.2 percentage points to 21.4 per cent — driven by people saying they had left the workforce to look after family or home, had retired, or had long-term sickness.
This is despite the number of job openings rising to hit a new record high of 1.29mn in the three months to March, with four in every 100 jobs unfilled.
The ONS headline measure of pay growth had picked up to 4 per cent in the three months to February, when measured in average weekly earnings and excluding bonuses — but the agency said this was artificially boosted by the large numbers who had been furloughed on 80 per cent pay a year earlier.
Even with this distortion, the surge in inflation meant earnings had fallen 1 per cent in real terms over the past year.
Rishi Sunak, chancellor, said the figures showed the “continued strength of the jobs market”, adding that the government had provided support of some £22bn to “cushion the effects of global price rises” on the cost of living.
But evidence of the worsening squeeze on living standards will add to pressures for the government to do more to bolster household incomes.
Ben Harrison, director of the Work Foundation, a think-tank, said the chancellor’s Spring Statement had “failed to provide economic security to the most vulnerable”.