'Economically inactive' at new high

Ministers welcomed a 15,000 fall in unemployment in the three months to April to 1.68 million, and a 9,300 reduction in the claimant count in May to 880,400, the 10th time the figure has fallen in the past 11 months.

But the figures were overshadowed by a big increase in the number of people classed as economically inactive, which includes students, those looking after a relative, workers who have taken early retirement or given up looking for a job.

The figure increased by 77,000 in the latest quarter to 7.95 million, the highest figure since comparable records began in 1971. The number of jobs in manufacturing firms also fell to a record low of 2.96 million after a fall of 49,000 in the latest three months compared with a year ago.

Tony Woodley, joint leader of the Unite union, warned against complacency in the fight for full employment.

"We must all - and that means government, employers, trade unions, financial institutions - commit ourselves to a proper programme of job creation across the economy so that the depressing scourge of long-term unemployment and hopelessness can be tackled."

Jim Murphy, Minister of State for Employment and Welfare Reform, welcomed the figures, saying: "Since 1997 the numbers on jobseeker's allowance, incapacity and lone parents benefits have fallen by over 900,000 and they continue to fall. Today's figures show that the number on jobseeker's allowance has now fallen for 10 out of the last 11 months.

"Our welfare reforms, combined with a strong economy, are helping more people to come off benefits and look for work, but we are determined to go further still and to break for good the cycle of poverty and dependency."

The data from the Office for National Statistics (ONS) also showed that the number of people in work fell by 10,000 in the quarter to April to just over 29 million. The claimant count is now at its lowest total since September 2005 and is down by 71,500 on the year.

Average earnings increased by 4% in the year to April, down by 0.4% from the previous month. Excluding bonuses, the figure was unchanged at 3.6%. Wage growth was 4.2% in private firms, down by 0.6% on the previous month, compared with an unchanged figure of 3.1% in the public sector. The UK still has one of the lowest unemployment rates in Europe at 5.4%, but the figure has increased by 0.2% in the past year compared with an average European Union fall of 0.9%.