Official figures show unemployment has fallen to the lowest level for 18 years.

January's figures reveal that the number of people out of work and claiming benefit is now just below 1.4m, a 12,300 decrease over the previous month.

But the government says the real jobless figure is much higher and has chosen Wednesday to launch an £8m advertising campaign to promote its New Deal programme which aims to find jobs for 250,000 young people.

Several major firms which have signed up for the New Deal will be unveiled and the ads are designed to encourage small- and medium-sized businesses to come forward and offer opportunities for youngsters.

Employment Minister Andrew Smith denied it was a figure-massaging exercise and said the New Deal would make a significant impact on skills shortages, particularly in the construction industry.

Real training provided

Mr Smith said: "The construction industry estimates that it can offer at least 3,000 opportunities a year to the young unemployed people on the New Deal."

Tony Blair met top industrialists at Downing Street on Tuesday to discuss New Deal

He said real training would be provided and added: "We are not offering a make-work scheme in which young people are pushed into dead-end jobs for six months.

"The training component of the New Deal is a key element in improving the employability of young people and has the added advantage to employers of expanding the skills base."

Employers receive a £60 per week subsidy and £750 towards training for each young person on the New Deal.

The government, keeping to a promise it made before the General Election, is planning to introduce a new method of calculating joblessness in April which will reveal thousands of "hidden" unemployed people.

Skills shortage

Many employers say they are now finding it difficult to fill vacancies, especially those in high-tech and heavy industries.

Hi-tech firms such as Vodafone are struggling to find skilled workers

Newbury, Berkshire, has the lowest unemployment rate in Britain - less than 1% are out of work - and the town's largest employer Vodafone is finding it hard to fill even unskilled posts.

Skills shortages are leading to higher wages and John Philpott of the Employment Policy Institute says this could cause inflationary pressures.

"If wage pressure does not subside the Bank of England will react to that by keeping interest rates higher than necessary and unemployment will have to rise to keep down on wage pressure."

Despite that prediction, figures revealed by the Office of National Statistics show that average earnings increased by 4.75% in the year to December, unchanged from the previous month.
 

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