The number of people claiming jobseeker's allowance has dropped to its lowest level in more than four years whilst employment figures have reached a record high.
But long-term and youth unemployment have increased, new figures showed today.
The so-called claimant count dropped by 29,200 in July - the ninth consecutive monthly drop - to 1.4 million, making it the lowest since February 2009.
Total unemployment, including those not eligible for benefit, fell by 4,000 in the quarter to June to 2.5 million.
Self-employment has also jumped by 6,000 to 4.1 million and the number of unpaid family workers have risen by 6,000 to 111,000.
Employment Minister Mark Hoban said the figures "paint a positive picture of the UK labour market."
"There are now more jobs available than at any time since the end of 2008, and more hours being worked than ever before - which shows that there are opportunities out there for people who want to work and get on in life," he said.
However, levels of youth unemployment among 16 to 24-year-olds increased by 15,000 to hit 973,000, while the number of unemployed people for more than two years rose by 10,000 to 474,000, the highest since 1997.
Dave Prentis, general secretary of the Unison union, said the "small drop" in unemployment rates masks the "damaging growth of under-employment plaguing the country and stifling economic recovery".
He said: "A toxic combination of part-time, minimum wage, zero-hours working is spreading across the country, as decently paid, full-time opportunities become increasingly rare.
"We know that just a few months ago there were, on average, almost four people chasing every vacant job in England, Scotland and Wales. For young people desperate to get their first job, these are desperate times. Getting the work experience they need to get a start in life is hard to find."
Other figures from the Office for National Statistics (ONS) showed that average weekly earnings, including bonuses, increased by 2.1 per cent in the year to June, up by 0.3 per cent on the previous month.
It is the first time the rate has gone over 2 per cent since 2011, but the ONS said it reflected unusually high bonus payments in April.
The number of people in work increased by 69,000 in the quarter to June to 29.78 million, the highest since records began in 1971.
The figure is 301,000 higher than a year ago, giving a rate of 71.5 per cent.
The unemployment rate has remained at 7.8 per cent, as opposed to the 7 per cent figure given by new Bank of England governor Mark Carney as a possible trigger for changes in interest rates.
Meanwhile, the number of people classed as economically inactive, including those caring for a sick relative or who are no longer seeking work, fell by 10,000 in the latest quarter to just under nine million, a rate of 22 per cent.
The ONS said the number of people aged between 16 and 64 in employment has almost recovered to pre-recession figures five years ago, but the employment rate has not recovered as much because of a 673,000 increase in the population of this age group.
The employment rate for men is unchanged at 76 per cent but has increased by 0.1 per cent to 66.7 per cent among women.
Pensions Minister Steve Webb said more women are in work than ever before.
"This growth has been driven by a rise in permanent, private sector jobs, which suggests businesses are feeling positive about the future, " he added.
Martina Milburn, chief executive of The Prince's Trust, said: "Rising youth joblessness crushes young ambitions. Our research shows that many young people are expecting nothing but a life on benefits.
"We cannot let a whole generation of young people give up hope for the future."
Additional reporting by PA