Jobless rate falls to lowest since 1974 but wages fall sharply behind inflation

Britain’s unemployment rate has fallen to its lowest level for over 47 years but workers have seen their wages fall further behind rocketing inflation, according to official figures.

The rate of unemployment dropped to 3.7% in the three months to March – the lowest since October to December 1974, the Office for National Statistics (ONS) said.

But as the cost-of-living crisis surges, people are feeling the pinch in their pay packets. Real wages, adjusted for inflation, fell by 1.2% in the 12 months to March.

The ONS figures reveal regular pay excluding bonuses dropped by 2.9% in March when taking Consumer Prices Index (CPI) inflation into account – the biggest fall since November 2011.

In the three months to February, real regular pay was 2% lower, the steepest decline since 2013.

It comes in spite of another pick up – of 4.2% – in regular average pay in the quarter.

Pay including bonuses jumped 7% and was up 9.9% in March as firms ramped up rewards for staff amid a booming jobs market.

The figures show "a mixed picture for the labour market," according to Darren Morgan, director of economic statistics at the ONS.

For the first time, there were fewer unemployed people than job vacancies, although the fall in the rate was also down to a rise in the number of people dropping out of the jobs market, the figures showed.

The latest ONS labour market data also confirmed another rise in the number of UK workers on payrolls, up 121,000 between March and April to 29.5 million.

But Covid is still having an impact on employment overall.

“Total employment, while up on the quarter, remains below its pre-pandemic level," Mr Morgan said.

“Since the start of the pandemic, around half a million more people have completely disengaged from the labour market.”

He added: “Indeed, with the latest fall in unemployment, to its lowest rate since 1974, there were actually fewer unemployed people than job vacancies for the first time since records began.”

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