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Fiona Kyle
May 23, 2022

Record low unemployment - what it means

Unemployment in the UK fell to the lowest level since 1974 according to the Office for National Statistics (ONS). The rate of people without a job now stands at 3.7%, meaning that there are fewer people without jobs than there are job vacancies for the first time on record.

There are now 1.3 million UK job vacancies which is the most there has ever been.

In the short term this is good news for anyone looking for work or to move between jobs. As there are a record number of vacancies, businesses will have to offer higher salaries to attract people to their jobs.

Although salaries are on the up - there's been an increase in regular weekly earnings of 4.2% in the first three months of 2022 - in real terms this is a fall because of inflation.

The rate of inflation is worked out every month by the ONS who check the price of a range of items in a virtual 'basket' of goods and services from a loaf of bread to a bus ticket. The price of everything in that basket is known as the Consumer Price Index (CPI). This is compared to what it would have cost a year ago and the change in price is known as inflation.

The increase in inflation - currently at 9% and set to rise again - is having an effect on people moving into employment from unemployment. It's also likely that people who already had jobs were looking for better pay as there was a record high of people moving between jobs in that period.

In the longer term, the increased salaries could cause a problem. Businesses paying their employees more money will, in turn, have to push up prices of their goods and services for customers which will lead to another increase in inflation. This will mean people can't afford to spend their money leading to a shrinking economy and eventually job losses and pay cuts.

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