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Unemployment falls but experts warn against ‘premature celebration’

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Unemployment has fallen by 97,000 according to the latest ONS statistics, but experts have warned against "premature" celebrations as youth unemployment remains high.

While the general unemployment rate is now 5.7% for the working population, the unemployment rate for 16- to 24-year-olds is 16.2%, the same as the previous quarter.

City & Guilds Group chief executive Chris Jones said while the rise of employment is “encouraging”, “it seems premature to celebrate when youth unemployment is still so high”.

He said: “Countless young people are caught in the vicious cycle of trying to find work to gain experience, but needing experience to find work.”

Jones called for more programmes to give young people the skills employers want. He said: “We need to see long-term planning that links skills to economic forecasts, greater coherence between central and local government, and more stability in the skills and employment system. Our young people’s futures depend on it.”

CBI director-general John Cridland echoed Jones’s concerns. He said: “While it’s good to see unemployment falling we still need to see more young people finding roles, especially those that help them develop their skills and progress up the earnings ladder".

Wages rise

The ONS statistics also show wage growth is continuing to outpace inflation. Average earnings (including bonuses) rose by 2.1%, and excluding bonuses by 1.7%.

However, CIPD labour market adviser Gerwyn Davies said this rise was “largely due to the bonuses being more prevalent in sectors such as finance”.

Davies called for a focus on “skills shortages and utilisation”. He said: “If we are to improve overall UK productivity, we must lift the bonnet on British businesses, and take a look at what they are doing to develop and use their people’s skills. Until this issue is tackled, performance and pay will continue to suffer.”

Ingrid Waterfield, a director in KPMG’s People Powered Performance team, said with the surge of spending power “many employees may now be thinking the time is right to look for a new job”, as employers can “justify bigger pay packets to attract fresh blood”. She advised employers to start thinking about their “wider offering”.