* Record rise in ILO jobless level, rate highest since 1997
* Question over value of diverging claimant count measure
By Fiona Shaikh and David Milliken
LONDON, July 15 (Reuters) - Britain's jobless rate hit a 12-year high in May after a record rise in unemployment over the previous three months, and the figures showed little prospect of any let-up as the economy struggles out of recession.
Economists drew scant comfort from the smallest rise in the number of people claiming unemployment benefit for a year, and instead questioned how useful the measure was given employment levels had dived.
The Office for National Statistics said ILO unemployment rose by 281,000 in the three months to May -- the biggest quarterly increase since records began in 1971 -- taking the jobless rate to 7.6 percent, the highest since January 1997.
"Truly horrible," said Howard Archer, economist at IHS Global Insight. "It is hard at the moment to be anything else than pessimistic about the labour market."
Analysts reckon this broad survey-based measure of joblessness, which also includes those seeking work but not claiming joblessness benefits, will hit 3 million next year -- bad timing for Prime Minister Gordon Brown's Labour government, which must call an election by next May.
Policymakers have also warned unemployment is set to keep rising even as conditions in the wider economy start to stabilise or improve, and Wednesday's data highlighted the uncertainty surrounding the timing of any recovery.
The number of people claiming jobless benefit rose by 23,800 in June, its smallest increase in a year, but even so the jobless rate on this measure still hit an 11-1/2 year high of 4.8 percent.
"These are clearly mixed results. It shows that the global recession is continuing to lead to rises in unemployment," employment minister Jim Knight told Sky News television.
The Bank of England has taken unprecedented measures to kick-start growth, slashing interest rates to close to zero and embarking on a 125 billion pound ($205 billion) programme to pump cash into the economy and encourage lending.
BoE Deputy Governor Charles Bean, touring the UK this week to explain the policy, has warned it could take as long as a year to show any effect and that Britain faces a long, slow haul to recovery.
CLAIMANT COUNT DOUBTS
Several months of below-forecast rises in the claimant count have led some analysts to question the figures.
Philip Shaw, an economist at Investec, said they could be skewed by a government scheme which gets some people off benefits but does not necessarily put them back into work.
But special measures by businesses to hold onto staff, such as asking workers to take pay cuts or unpaid leave or work shorter hours may also be helping.
"That may be a feature of what's going on, but what we're thinking now is the claimant count numbers are becoming increasingly unreliable, and the ILO measure is likely to be a truer reflection of the labour market," said Shaw.
Companies have been shedding jobs apace. Telecoms firms BT
Group
Wednesday's data showed the number of people in work plunged a record 269,000 in the three months to May.
"I don't think we're going to see any significant improvement in this data any time soon," said Ross Walker, economist at RBS.
Average earnings growth was higher than expected in the three months to May, due to base effects, but pay growth excluding bonuses eased to 2.6 percent -- its slowest rate since records began in 2001.
"This may be because this time round employees are accepting lower wages and hours in return for keeping their jobs," said George Buckley, economist at Deutsche Bank. (Editing by Mike Peacock) ($1 = 0.6102 pounds)