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Employment high

The employment rate has hit a record high at 73.1 per cent in the three months to May, according to official figures.

The Office for National Statistics has been compiling the data for 43 years, and the latest data reveals that 30.6 million people are currently in work. The strength of the labour market has been the strongest spot in the recovery, surprising economists and policymakers. In the last year, 929,000 jobs were created as the economy grew at an annual rate of more than 3 per cent.

At present, the UK ranks fourth, behind Germany, Canada and Japan for the highest employment rate. Economists say the rise in employment, which matches highs in 2005 and 1974, has been driven by changes to the benefits system and a rise in the number of over-50s who have stayed in work.

John Philpott, director of The Jobs Economist consultancy, said that the tightening up of eligibility of benefits for single parents had encouraged more people into the workforce. "The change in the principle, to get more people who were on benefits to look for employment, has had an effect," The ONS said that the employment rate for women in the three months to May, at 68.1 per cent, was also the highest on record. An increase in older workers has also driven up the employment rate. Mr Philpott said: "Many of those aged over 50 have set up as self-employed rather than getting involved in the benefit system."

About 254,000 jobs were created in the three months to May, pushing the unemployment rate down to the lowest level since December 2008 at 6.5 per cent . Youth unemployment dipped to a five year low at 17.8 per cent. The number of those aged 16 to 24 unable to find work was 817,000, compared with about one million at the height of the crisis. Over the past year, youth unemployment has fallen by 141,000, the largest drop since the 1980s. The number claiming jobseeker’s allowance shrank by another 36,300 in June.

However, average earnings showed that the squeeze on living standards is biting hard again. Pay crept up by only 0.7 per cent over the past year, the slowest rise since records began in 2001 and less than half the rate of inflation. Including bonuses, pay was 0.3 per cent higher in the year, weaker than economists’ forecasts of 0.5 per cent and the slowest rate of growth since May 2009. Len McCluskey, the general secretary of Unite, said: "The unemployment figures mask a nation that is working harder but getting poorer." However, Esther McVey, the employment minister, said that the figures showed that "the government’s long-term economic plan to help businesses create jobs and get people working again is the right one".

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