RISING unemployment and slowing wage rises are hitting workers as Labour struggles with its economic strategy.

A run of bad economic figures, including negative growth and rising prices, continued for the beleaguered government today as official statistics showed joblessness at a four-year high.

They also revealed that average earnings growth is slowing to its lowest level in nearly three years, while continuing to outstrip inflation.

TUC general secretary Paul Nowak claimed that “there is no overnight fix to these long-term issues” in a statement responding to the figures, which he blamed on “toxic Tory legacy.”

He urged the Bank of England to help out by cutting interest rates.

“The Bank of England must offer a helping hand instead of keeping interest rates high — another rate cut would ease pressure on household budgets and make it more affordable for businesses to invest,” he said.

“It’s also vital we see sustained investment in the services that support people to move into and stay in work — particularly young people who need genuine opportunities to learn and earn as they start their careers.”

The Office for National Statistics (ONS) said the rate of UK unemployment increased to 4.7 per cent in the three months to May, from 4.6 per cent in April, the highest level since June 2021.

As with the rise in prices, this was worse than economists had been predicting, suggesting the situation is deteriorating fast, with gross domestic product shrinking for the last two months.

And average earnings growth slowed to 5 per cent in the period to May to its lowest level for almost three years.

ONS director of economic statistics Liz McKeown said: “The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated.

“The number of job vacancies is still falling and has now been dropping continuously for three years.”

Charlie McCurdy, of the Resolution Foundation, commented:  “The jobs market continues to weaken and has now shed 143,000 employee jobs over the past seven months.

“This weakness is starting to show up in lower wage growth, with the recent pay recovery rapidly running out of steam.

“The latest jobs data presents a clear case for lowering interest rates. But higher than expected inflation muddies the picture. The Bank’s decision next month is far from straightforward.”

Putting the best face on the pile-up of negative data, employment minister Alison McGovern said inflation-adjusted wages continued to rise, showing that the government was “helping more people into work and putting more money in their pockets.”

She added: “But we need to go further. Under our plan for change, job centres everywhere are changing to end the tick-box culture and serve employers and those who need work better.”

And a Downing Street spokesman claimed better times were ahead.  

He said: “The first job of this government was to stabilise the British economy and the public finances and we’re now moving into a new chapter to deliver on the promise of change.”

Unemployment in Scotland did fall slightly, but the Scottish National Party urged further measures to appease business.

Deputy First Minister Kate Forbes said: “These figures show that the number of payrolled employees in Scotland remains high and median monthly pay is greater than the UK as a whole.

“We need decisive action from the UK government to boost growth. That’s why we are calling for a complete reversal of the damaging decision to raise employers’ National Insurance contributions, which is hampering business confidence, investment and jobs.”

Decisive action of any sort is likely to be on hold until the autumn Budget, when Ms Reeves is expected to announce some tax rises alongside further spending cuts.