UK Unemployment Rate Falls to Lowest in 48 Years but ‘Bumpier Ride’ Ahead

A "We are recruiting!" sign is seen in the window of a cafe in South Kensington in London, on June 4, 2021. (Rob Pinney/Getty Images)

The UK’s unemployment rate has dropped to the lowest level in 48 years, but experts say it could well be “the calm before the storm” and the economy may face a “much bumpier ride” ahead.

According to the latest data from the Office for National Statistics (ONS), the rate of unemployment dropped to 3.7 percent in the three months to March, the lowest since October to December 1974.

At the same time, job vacancies reached another record high, and “there were actually fewer unemployed people than job vacancies for the first time since records began,” said ONS director of economic statistics Darren Morgan.

At a Cabinet meeting on May 17, Prime Minister Boris Johnson said he was “pleased” to see the new data, which he said shows “our plan for jobs is working.”

But the fall in the jobless rate—down from 3.8 percent in the three months to February—was also due to a rise in the number of people dropping out of the jobs market.

Morgan said total employment “remains below its pre-pandemic level,” as around half a million more people have “completely disengaged from the labour market” since the start of the CCP (Chinese Communist Party) virus pandemic and are therefore not counted in unemployment statistics.

According to the new data, regular pay excluding bonuses dropped by 2.9 percent in March when taking Consumer Prices Index (CPI) inflation into account, the biggest fall since November 2011.

Jonathan Ashworth, Labour’s shadow secretary of state for work and pensions, warned Britons were facing a “cost-of-living tsunami,” with real wages now almost £300 ($374) lower than they were 15 years ago.

Labour has been calling on Chancellor Rishi Sunak to bring forward an emergency budget to help people deal with the cost-of-living crisis.

Sunak, who has so far resisted the pressure to launch extra help, said: “I understand that these are anxious times for people, but it’s reassuring that fewer people are out of work than was previously feared.”

Professor Len Shackleton, labour market expert at free market think tank the Institute of Economic Affairs (IEA), said the new labour market data was a “mixed bag.”

“While it is good to see that most people can find some sort of work at the moment, today’s data may be the calm before the storm,” he said.

“They predate the tax hits which came in April, the energy price hikes, and the effects of the Ukraine crisis, all of which are going massively to affect household living standards, drive changing labour market reactions, and may lead to disruptive strikes. We are likely to be in for a much bumpier ride.”

PA Media contributed to this report.