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Record fall in youth unemployment pushes UK jobless rate to six-year low

But average pay growth slips into negative territory for the first time in more than five years

A record fall in youth unemployment has pushed the jobless count to its lowest level for more than five years despite “dismal” wage growth, figures showed today.

In a boost for the Coalition, overall unemployment fell by 132,0000 to 2.08 million in the three months to June - the lowest since January 2009.

The main driver was a 102,000 decline in joblessness among 16-24 year olds to 767,000 over the quarter - the biggest since records began in 1992. Youth unemployment is now 206,0009 lower than a year ago, also a record.

The figures cover a quarter during which the UK economy finally reclaimed the ground lost to the financial crisis six years after the beginning of the recession.

Chief Secretary to the Treasury Danny Alexander said: “There is still a long way to go, but this is solid progress and the significant fall in youth employment is particularly encouraging and welcome.”

The UK’s overall workforce swelled by 167,000 to 30.60 million over the period, lifted in part by 153,000 workers from Romania and Bulgaria, up 13,000 on the first three months of the year.

But the figures also revealed the pay squeeze continues for much of the British people as pay packets lagged far behind the cost of living – fuel for Labour’s “cost of living crisis” attacks on the Coalition.

Average pay growth slipped into negative territory for the first time in more than five years, falling 0.2 per cent, although this was in part due to higher paid employees deferring bonuses to take advantage of the Chancellor’s cut in the top rate of income tax to 45 per cent.

Even stripping out bonuses, annual pay growth still fell to an all-time low of 0.6 per cent - the lowest since records began in 2001. That is barely a third of the official inflation rate, which stood at 1.9 per cent in June.

Ian Brinkley, chief economist at the Work Foundation, called the wage figures “dismal”. He warned: “It is hard to see where the pay revival is going to come from – and until real wages start to grow again, it will not feel like much of a recovery to most people in work.”

The claimant count fell for the 21st month in a row in June, by 33,600 to 1.01 million. That puts the number of Jobseeker’s Allowance claimants on course to fall below a million next month for the first time since September 2008.