UK unemployment rate falls to 5 year low of 6.9%, says Office for National Statistics

The unemployment rate in the UK fell to 6.9% in the three months to February this year, taking it to its lowest point since 2009, the ONS has identified. 
A staggering 77,000 people found work in latter stages of 2013 and the first two months of 2014, with it being estimated that just 2.24 million eligible people are unemployed at present.
The ONS also had positive news on the growth in the average workerís salary, with it being identified that they have risen by 1.7% in the year to February, outstripping the 1.6% inflation rate for the same period. 
The new marks the first occasion in which the growth in worker wages has been higher than the rate of inflation measured by the Consumer Price Index, and should ease the pressure on low and middle income householdís who have been subjected to severe financial difficulties due to the cost of living constantly rising more quickly than consumer spending power. 
It is also the first time that the unemployment rate has fallen below 7% since the Bank of England set the target last year, and means that a generational high of over 30 million are currently in some form of work.
The government has pointed to the data as clear evidence that their economic policies have been effective, and also highlighted that the total level of people claiming Jobseekerís Allowance dropped by 30,400 to just 1.14 million last month,  suggesting that their welfare reforms have had an impact in encouraging people to enter into employment. 
ëPath to prosperityí
The ONSís unemployment data was positive across the age spectrum, with youthís self employed and part timers seemingly benefitting from the recent economic upturn experienced in the UK.
Official statistics revealed that the number of people aged between 16 and 24 years old who were unemployed in the three months to February dropped by 38,000 to 881,000, taking the rate to its own 5 year low. 
The number of part time workers in the country also fell during the same period, with it being estimated that 1.42 million are currently in this kind of employment, a drop of 17,000 over the course but up on year by year comparison. 
The quantity of self employed workers also increased by 146,000 to 4.5 million, which is the largest it has been since 1992. 
The ONS has argued that the figures illustrate the improvement in working conditions that businesses are experiencing at present, pointing to the improvement in labour productivity as clear evidence that the prognosis is finally looking positive for SMEís.  
Joe Grice, chief economic adviser at the ONS, said: “These figures – rising employment and falling unemployment and inactivity – continue the strong trend in the labour market that has been seen in recent months. Self-employment has again been a prominent growth area.”
The government has compounded on the data, arguing that it is clear evidence that the governmentís economic policies are beginning to take full effect.
Employment Minister Esther McVey said that the country is ”back on the path to prosperity”
Chancellor of the Exchequer, George Osborne, also suggested that the rapidly falling unemployment figures have vindicated his difficult economic decisions in recent times, including his prioritisation of the economy over immediately addressing living standards and the cost of living. 
Mr Osborne said: “There are now a record number of jobs in Britain – and today we have taken a further step in meeting the ambition I have set for full employment. Every job created means another family with greater economic security and the prospect of a brighter future.
“These remain difficult times for families facing pressures on their budgets, and much work needs still to be done to build a resilient economy. But today’s news supports the argument we have made all along that the only way to see rising living standards is to grow the economy”.
Shadow work and pensions secretary Rachel Reeves responded optimistically to the unemployment news, but called on the government to adopt Labourís job guarantee proposal in order to tackle the ongoing problem of youth unemployment in the country. 
She added: “At long last, earnings are finally rising faster than CPI inflation when bonuses are included, but after four years when prices have risen faster than wages; there is a huge amount of lost ground to catch up.
“Working people are now over £1,600 a year worse off than when David Cameron came to office, most people are not feeling any recovery, and the link between the wealth of the nation and family finances remains broken.
“It’s deeply complacent and out of touch for the Tories to try and claim this deep-seated cost-living crisis has suddenly been solved. Only Labour has a clear plan to earn our way to higher living standards for all, not just a few at the top.”
Rates rise?
The news of the 6.9% unemployment rate marks the first occasion that it has fallen under the threshold previously identified by the Bank of England as the point in which they would begin considering increasing interest rates from their historic low of 0.5%, where they have remained since 2009.
The recent improvement in the UK economy coupled with the staggering rate in which unemployment has fallen has compelled many to call for interest rates to be risen now, though the countryís leading economists have argued that these calls will likely be ignored until next year.
Howard Archer, chief UK and European economist at IHS Global Insight said that it is increasingly likely that the Bank would wait until 2015 to raise rates, highlighting that they are now looking at a wide range of factors to determine when to do so.
He added: “Not only has the Bank of England repeatedly stressed that an unemployment rate of 7% is not a trigger for an automatic interest rate hike, but it modified its forward guidance policy in February to focus on the amount of slack it considers to be in the economy, based on a broad range of indicators.
“The Bank of England will likely regard the fact that there are 1.421 million people who are working part-time because they cannot find a full-time job as evidence that there is still substantial slack in the labour market.”
David Kern, chief economist at the British Chambers of Commerce, said the most recent data illustrated the buoyancy and plasticity of the UK labour market.
But he added: “Concerns do persist, however. The youth unemployment rate is still much too high at 19.1% and, while long-term unemployment is falling, more than 800,000 people have been unemployed for more than a year.
“These concerns aside, it is clear that the recovery is on the right track. To consolidate this, it is important that we see measures to increase productivity and firmer action on youth and long-term unemployment.
“Improved access to finance, incentives to recruit apprentices, and support for export and investment will go some way to achieving this.

 

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