Unemployment Up As Spending Squeeze Tightens
The latest employment figures show average earnings growth at its lowest level on record - intensifying the squeeze on household budgets.
The Office for National Statistics (ONS) said that wage growth, excluding bonuses, was measured at just 0.8% in March - a month where the CPI measure of inflation stood at 2.8%.
Analysts suggest the dip in wage growth is the price the labour market is paying for higher employment.
When bonuses were included, annual wage growth for the three months to March was 0.4%, a fall of 0.4% on the previous quarter.
Economists have expressed renewed fears for the fledgling economic recovery in the wake of the pay statistics.
Howard Archer of IHS Global Insight said: "While the economy has recently shown welcome signs of improvement, a serious concern for growth prospects is that consumer spending will be held back by low earnings and softer employment."
Unemployment over the same January to March period grew by 15,000 to 2.51 million though the jobless rate eased to 7.8%.
However, the number of people claiming unemployment benefit fell more than expected - by 7,300 in April.
The figures also revealed that 902,000 people had been out of work for more than a year, a 23,000 increase on the three months to December.
The number of unemployed 16 to 24-year-olds fell by 17,000 to 958,000 while those classed as economically inactive, including students, people on long-term sick leave and people who have given up looking for work, rose by 47,000 to nine million.
Despite today's increase in unemployment, the total is 92,000 lower than a year ago.
Minister for Employment Mark Hoban said: "We are seeing continuing falls in the number of people claiming Jobseeker's Allowance which is positive. Whilst there has been a disappointing increase in the headline rate of unemployment, we shouldn't forget the progress we are making.
"We are not complacent. To win the global race we need to do all that we can to help people achieve their aspiration to look after themselves and their families."
TUC General Secretary Frances O'Grady said: "These jobs figures are troubling. There are now more people out of work today than when the coalition took office three years ago.
"Those in work are taking a hammering in their pay packets with wage growth down to just 0.4 per cent, while prices rise far more quickly. It's no wonder the economy is struggling when people in work are getting poorer every month."
Liam Byrne, Labour's shadow work and pensions secretary, said: "We now have definitive proof the Government has simply failed to get Britain back to work."
He said the Government had done nothing in the Queen's Speech to help solve what he called the "jobs crisis" and instead Tory MPs were bickering over Europe.