The underlying level of unemployment fell again last month for the fifth month in a row, according to the Live Register figures. The seasonally adjusted unemployment total dropped by 1,700 in December, bringing the decline for the year as a whole to 15,300. The Government will be hoping that the downward trend can continue into this year, although it is not clear precisely what factors are contributing to the fall.
Not long ago the Live Register was seen as a key measure of the economy's health. But in recent years, increasing doubt has been cast on the accuracy of the figures and whether they present a true picture of the numbers out of work. For this reason, the Central Statistics Office is, from this year, to undertake a quarterly survey of the labour force to try to get a more accurate picture of trends in the jobs market.
The strength of the economy and the buoyant level of job creation is one reason for the downward trend in the Live Register. But it also appears clear that a crackdown on social welfare fraud - announced towards the end of last year - has been a major contributor. The bulk of the decline in unemployment last year came after this announcement, which followed Government research suggesting that a sizeable number of people were claiming unemployment payments to which they were not entitled.
Forecasting the trend in the Live Register this year, is thus a difficult task. Job creation is likely to continue apace, but it is unclear to what extent the drive against welfare fraud will contribute to a further decline. The forecasts underpinning the Government's spending plans for this year, count in only a small decline in the average unemployment level for 1997, although Ministers will obviously be hoping that a larger fall takes place.
The fall in the Live Register carries a number of implications for Government policy. One is that the overall cost of paying unemployment benefits will fall, freeing resources for other areas. This should allow some extra money to be spent on addressing the crisis of long term unemployment.
Recent research by the Economic and Social Research Institute suggests that strong growth does lower long term unemployment - the labour force figures show a 25,000 drop in the long term jobless total in the year to last April. But there are still large numbers of people who are not benefiting from the strong growth in the economy. A key challenge for the Government is to help the long term jobless to make the transition back to the jobs market and to help the more recently unemployed to get back into work as quickly as possible. Skills training for those in work is also a crucial issue, given the fast changing nature of technology.
While there will be intense focus on the tax package, the forthcoming Budget gives the Government a chance to put a focus on these issues. Tackling unemployment is a long and complex business and while some progress has been made, the Budget package must show that this remains a Government priority.