UK unemployment has dropped for the third consecutive month, down to 2.45 million, confirming a fall of 33,000 during the final quarter of 2009.
During previous recessions in the 1980s and 1990s as many as 3 million people were out of work. Although some bearish commentators believe that these levels could be seen again within the year, others have been cheered by a gradually improving labour market.
But the unemployment figures do not necessarily tell the whole story. While the number of people unemployed has fallen, the number of people judged to be 'economically inactive' has actually risen. This includes those who are too ill to work, those who are looking after children full-time and, crucially, those who have simply given up looking for a job.
According to the Office for National Statistics there are now 8.16 million economically inactive people in the UK. The number rose by 149,000 during the quarter just passed. This is the highest level since records began in 1971.
A high level of economic inactivity, while potentially good news for those who remain in the job market, is damaging for the economy as a whole. Widespread economic inactivity leads to a reduction in consumer spending, which has damaging knock-on effects for business as a whole.
