• Surprise drop in total of people out of work to 2.48m • Women claiming jobseeker's allowance at near 15-year high • Unemployed 16- to 25-year-olds up 12,000 on quarter

This article is more than 9 years old

This article is more than 9 years old

Youth unemployment has remained at near record levels with more than one in five young people out of work, data released on Wednesday showed.

The latest unemployment figures from the Office for National Statistics (ONS) show the under-25s and women workers are bearing much of the pain in Britain's jobs market, while average earnings continued to lag behind inflation. But economists were encouraged by an unexpected fall in the total number of people out of work, which cut the UK's jobless rate from 8% to 7.8%.

The number of people aged between 16 and 24 who were out of work hit 963,000 in the three months to February – 12,000 more than in the previous quarter. This pushed Britain's youth unemployment rate up by 0.1 percentage points to 20.4%.

The number of unemployed 16- to 17-year-olds hit records levels in the quarter, increasing by 14,000 to 218,000. The number of unemployed 18- to 24-year-olds fell by 2,000 on the quarter to reach 745,000.

The ONS reported the number of women claiming jobseeker's allowance has reached a near 15-year high of 462,300.

The youth unemployment data was slightly better than a month ago. The total number of young people out of work, which is measured on a rolling three-month basis, had hit 974,000 in the three months to January, the highest level since records began in 1992.

Challenges ahead

The UN's International Labour Organisation (ILO) measure of unemployment showed that 2.48 million people were out of work in the three months to February, lowering the unemployment rate from 8% to 7.8%. But the number of people claiming unemployment benefit in March rose by 700.

Chris Grayling, the employment minister, said the data was "another step in the right direction". Grayling pointed out that youth unemployment had fallen if young people in education were excluded from the figures.

"However, there are challenges ahead and our priority is to continue to support the economy, by reducing the deficit and putting in place measures to encourage growth in the private sector," Grayling said.

But Paul Kenny, general secretary of the GMB union, claimed the government failed to comprehend the pain it was creating by cutting jobs across the private sector.

"The government is ignoring the costs of the social breakdown that is a consequence of mass youth unemployment," Kenny said.

Campaigners have warned that Britain risks creating a "lost generation" of young people who are unable to find work. TUC general secretary Brendan Barber criticised the government on Wednesday for scrapping the Future Jobs Fund, which provided grants to firms who created new jobs.

Gender divide

The data also showed that while the number of unemployed men fell by 31,000 during the three months to February to 1.45 million, the number of unemployed women increased by 14,000 to 1.03 million.

The claimant count data also showed a gender divide. The total number of male claimants fell by 4,400 in March to reach 988,200 in March 2011 but the number of female claimants increased by 5,100 to reach 462,300, which is the highest figure since October 1996.

The number of male claimants has now fallen for 14 consecutive months but the number of female claimants has increased for nine months in a row. This may reflect changes in the balance of the UK workforce, as public sector bodies cut staff and private firms hire new employees.

The ONS also confirmed that wage growth was continuing to lag behind inflation, another sign that the Bank of England may not rush to raise interest rates.

Total pay, including bonuses, grew by an average of 2.0% for the three months to February 2011, down from 2.3% for the three months to January. The consumer prices index hit 4.4% in February, while the retail prices index rose to 5.5%.

Huddlebuy, a group buying website for small businesses, reported on Wednesday that two-thirds of small firms had delayed taking on new staff because of the uncertain economic conditions.

More encouragingly, the National Council for Graduate Entrepreneurship reported that 1,350 new firms had been created through a government-funded scheme called Make It Happen, designed to encourage graduates to set up their own companies.