The number of people without a job in the UK fell by almost 100,000 in the three months to December last year, according to official figures released today.

The Office for National Statistics (ONS) said overall working-age employment increased by 103,000 to nearly 31 million, which is the highest number ever.

In better news for people in work average earnings also increased with wages including bonuses up 2.1% compared with a year earlier. Discounting bonuses the figure was 1.7%.

Yesterday separate official figures revealed consumer price inflation at 0.5%, meaning average salary increases are now well above the average increase in everyday costs.

James Sproule, chief economist at the Institute of Directors said the wage data was particularly welcome and should begin feeding into more economic growth and better tax receipts in future.

“Throughout the recession, employers and employees co-operated to save jobs, by forsaking pay rises and cutting back hours,” he said.

“We are now seeing the benefits of this mature and responsible approach. Businesses are recovering strongly, as they benefit from having maintained an experienced and skilled workforce, and staff are being rewarded with modest and sustainable pay rises and bonuses.

“Average earnings in this period were boosted by strong year-end bonuses across a broad range of sectors from construction and manufacturing to finance and business services, suggesting good performance across the economy.

“However, raising bonuses and not salaries implies some companies are still cautious about increasing their fixed costs.”

But trade unions were more sceptical. Trades Union Congress boss Frances O’Grady said there was a “long way to go” before a full labour market recovery.

“At the current rate of progress it will take until at least the end of the next parliament just for wages to recover their lost value,” she said.