This is almost unheard of. Unemployment was most recently this low in December 1973, when the UK set an unrepeated record of just 3.4%.
The problem with this record is that the statistical definition of “unemployment” relies on a fiction that economists tell themselves about the nature of work. As the rate gets lower and lower, it tests that lie. Because – as anyone who has studied basic economics knows – the official definition of unemployment disguises the true rate. In reality, about 21.5% of all working-age people (defined as ages 16 to 64) are without jobs, or 8.83 million people, according to the Office for National Statistics.
Wages in the private sector have not started to rise. Public-sector wage rises are capped at 1%. There has been a little uptick in new-hire rates, but the overall trend is flat. This is part of the proof that shows real unemployment can’t be just 4.5%. …
The answer is that unemployment is not really that low. In reality, about 21.5% of British workers are either officially unemployed, inactive, or employed part time even though they really want full-time work. (The ONS has a chapter on that here.) Some of those people – parents with newborns, university students – may not want jobs right now, but they will want jobs soon. Even when you take those out of the equation, the true rate of people without jobs who want them looks like this, according to analyst Samuel Tombs at Pantheon Economics: Note especially that the rump of “inactive” workers – the black bars – has stayed roughly the same for two decades.
Unemployment in the UK is now so low it’s in danger of exposing the lie used to create the numbers