By Marcus Leach

The figures released by the Office for National Statistics (ONS) on Wednesday, showing a drop in the UK unemployment rate, have been greeted with mixed feelings by industry experts.

Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD), felt that whilst figures had dropped it was not all good news for the UK.

“These are remarkably good jobs figures for an economy passing through a period of fragile recovery and fiscal austerity. The first quarter saw a fall in unemployment for men, women and young people, driven in particular by a welcome rise in the number of people in full-time jobs," he said.

“The news is not all good. Job vacancies have fallen, most notably in the public sector, there has been a rise in claims for Jobseeker’s Allowance, and unemployment has increased in the South West, North East, North West and London. Moreover, with the full impact of public sector job losses still to be felt and the broader economic outlook uncertain it’s far too early to tell if the good news on the jobs front will continue.

“Indeed, today’s figures are something of a conundrum for economists. We’re familiar with the phenomenon of jobless growth but the UK economy is at present creating jobs without growth. Assuming the most recent ONS estimates of GDP are correct and that total output has been broadly flat since last autumn, more people in work implies a slump in labour productivity.

"Employers are presumably willing to tolerate this because price inflation is far outstripping pay rises, thereby putting considerable downward pressure on workers’ real pay rather than hitting profits. Today’s figures show regular pay (excluding bonuses) rising at an annual rate of just 1.9% in the private sector and 2.1% for the economy as a whole at a time when retail price inflation is increasing by more than 5%.

“The ongoing real pay squeeze is thus helping an anaemic economy support employment as well as offsetting fears of an inflationary pay-price spiral. If this continues the pain of economic austerity is likely to be observed as a widespread fall in living standards rather than a further sharp rise in unemployment.”