Unemployment falls below pre-pandemic levels but pay growth hit by inflation

The number of workers on payrolls jumped by 275,000 between January and February to a fresh record of 29.7 million, the ONS said.

15 March 2022

The number of jobless people in the UK has dropped below levels seen before the pandemic struck for the first time, but earnings continue to fall behind rocketing inflation, according to official figures.

The Office for National Statistics (ONS) said there were 1.34 million unemployed in the quarter to January, down 88,000 on the previous three months and below the 1.36 million recorded in December to February 2020.

The unemployment rate fell back once again, to 3.9% in the most recent quarter.

It came as the number of workers on payrolls jumped by 275,000 between January and February to a fresh record of 29.7 million, with the ONS saying demand for workers “remains strong”.

Vacancies also hit a new high, up 105,000 quarter on quarter to 1.3 million as firms scrambled to secure staff amid a recovering wider economy.

But the figures revealed the ongoing pressure on household finances, as regular pay failed to keep up with soaring inflation, with average weekly earnings up 3.8%, excluding bonuses.

This was 1.6% lower than Consumer Prices Index (CPI) inflation over the same period, according to the ONS.

Grant Fitzner, chief economist at the ONS, said: “The labour market continues to recover from the effects of the pandemic, with the number of unemployed people falling below its pre-pandemic level for the first time and another strong rise in employees on payroll in February.

“However, the number of people out of work and not looking for a job rose again, meaning total employment remained well below its pre-pandemic level.

“We have seen yet another record number of job vacancies and, with the redundancy rate falling to a new record low, demand for workers remains strong.”