Britain’s unemployment rate dipped to 4.9 per cent in the three months ending February, a period during which England entered its third lockdown and the rest of the country faced significant Covid-19 restrictions.
The fall is slightly down from the 5 per cent recorded in the previous three-month period and the jobs market was "broadly stable", but "remains subdued", the Office for National Statistics (ONS) said.
Data also showed more than half of the 813,000 UK jobs lost during the pandemic were linked to people under 25.
UK Finance Minister Rishi Sunak attributed the lower rate to the government’s furlough scheme, which protected 11.2 million jobs during the pandemic.
“As we progress on our roadmap to recovery I will continue to put people at the heart of the government's response through our Plan for Jobs – supporting and creating jobs across the country,” Mr Sunak said.
Britain’s economy has been hammered by the pandemic with output falling 9.9 per cent last year, however, the Coronavirus Job Retention Scheme, known as the furlough programme, was extended by Mr Sunak in his March budget until September 30 from the previous April 30 deadline.
The extension takes its protection well beyond June 21 when Prime Minister Boris Johnson hopes all social restrictions will be lifted.
The government will cover 80 per cent of wages, up to a maximum of £2,500 a month, until the scheme ends, however, employers will be asked to make a 10 per cent contribution in July, and 20 per cent in August and September.
Meanwhile, data from Britain’s tax office showed the number of people on company payrolls fell by 56,000 between February and March, the first decline in four months.
That pushed the total number of jobs lost since the start of the pandemic up to 813,000, the ONS said, with 436,000 or 53.7 per cent of those lost jobs linked to people under the age of 25.
Matthew Percival, director of people and skills at the Confederation of British Industry, said evidence continued to mount that young people have been “hardest hit” by lockdowns.
“Support for jobs and training will be vital to making the UK’s economic recovery inclusive,” Mr Percival said.
Suren Thiru, head of economics at the British Chambers of Commerce, said long-term unemployment, particularly among young people, might hamper progress towards pre-pandemic levels in the labour market.
"Further action will be needed to support the labour market when the furlough scheme ends, including supporting businesses to recruit and retain staff through a temporary cut in employer national insurance contributions," Mr Thiru said.