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Wednesday, June 16, 1999 Published at 13:08 GMT 14:08 UK

Business: The Economy

Unemployment continues to fall

Unemployment has continued to fall in the UK, confirming that a modest economic recovery is continuing.

Patrick Bartlett looks at concerns that the new, mostly service-based jobs, are not sustainable
Official employment figures show that the UK continues to have one of the highest levels of employment ever, and the jobless total is at a 19-year low.

Unemployment fell by 6,500 to 1.285m in May, with the rate unchanged at 4.5%, based on the number of people claiming benefit.

The broader measure of unemployment favoured by the government, measured in line with standards set by the International Labour Organisation, also fell from 6.3% to 6.2% in the three months to April.

[ image: The service industry is growing]
The service industry is growing
That figure, which includes people who say they are looking for work but are not claiming unemployment benefit, fell by 23,000 to 1.81m.

The Office for National Statistics says that the trend is "slightly downwards".

Meanwhile, the number of people in work rose to a record 27.36m, representing 73.4% of the adult population of working age.

Ed Crooks: The figures reflect the sense that worse is over for the economy
The figures are better than was expected by most City analysts, and suggest that the UK has weathered the economic storms of the past six months, and is heading for a 'soft landing.'

Employment Minister Andrew Smith said: "I welcome yet another record in the level of employment of over 27.3 million people - the highest ever recorded - which confirms the continued strength and buoyancy of the labour market.

"It is also good that unemployment is down, both on the ILO measure and on the claimant count."

Lower earnings growth

Even more encouraging for those worried about inflation, average earnings growth slowed from 4.8% to 4.6% in the three months to April.

[ image: Manufacturing is still in the doldrums]
Manufacturing is still in the doldrums
Government statisticians said that the main reason for the decline was that Christmas bonuses dropped out of the latest set of figures.

Some economists have been surprised that with the labour market so tight, average earnings are not rising faster.

But the positive news also weakens pressure on the Bank of England to lower interest rates further.

"Another 6,500 drop in unemployment suggests that a soft landing is well and truly on the cards," said Rob Hayward at Bank America. "This clearly reduces pressure for the Bank of England to ease again."

TUC questions UK record

Meanwhile, the Trades Union Congress (TUC) has warned that the UK's strong employment record is a mirage.

BBC Industry Correspondent Stephen Evans reports on the TUC's concern over employment figures
The TUC believes the official data paints a picture which has little to do with reality, and says there are large numbers of "hidden unemployed".

In a report, the TUC's researchers say the real rate of unemployment has been disguised by a cut in "workforce participation rates".

[ image: John Monks does not believe the official figures]
John Monks does not believe the official figures
Many people without a job never bother to register as being unemployed - and therefore fail to show up in the statistics.

The unions say the UK has adopted an American "hire and fire" mentality, which has damaged the opportunities for job creation.

According to the unions, the French may have a higher unemployment rate, but they also have a far better job creation rate in the 1990s than the UK.

The Netherlands, a "star performer" in terms of job creation, is lauded for its strong welfare system and "social market economy".

Lowest level since 1977

In Scotland, the rate of unemployment fell by 600 to 134,000 - a rate of 5.5%, which is the lowest level since 1977.

HSBC economist Adam Cole on why unemployment is both rising and falling
The level of vacancies notified to job centres in Scotland fell by 2,900 between April and May but was up by 700 compared with the same period in 1998.

The fall in unemployment was welcomed by Iain McMillan, Director of CBI Scotland.

He said: "Although there are areas of Scotland's economy, such as manufacturing industry, which are experiencing very tough times, the unemployment rate is relatively satisfactory."

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