The latest labour market data has led to condemnation of Government policy from opposition political parties.
Estimates from the Office for National Statistics show 97,157 people aged 16 to 64 in Devon were classed as 'economically inactive' as of March – defined as out of work and not recently searching for a job.
This was the equivalent of 21.3% of people in that age bracket in the area – down from 22.5% a year before.
The figures further show 9,564 were claiming unemployment-related benefits in Devon – which includes Universal Credit and Jobseeker's Allowance.
This gives the area a claimant rate of 2%.
Nationally, the figures have shown unemployment has increased, while rising wages have been eaten up by inflation.
Latest estimates suggest around 2.5 million people were economically inactive due to long-term sickness as of June – up 400,000 from before the coronavirus pandemic.
The ONS said regular pay growth, which excludes bonuses, reached 7.8% in June.
“This is the highest regular annual growth rate we have seen since comparable records began in 2001,” a spokesperson said.
But inflation ate away all this growth – with Consumer Prices Index inflation taken into account, pay actually dropped by 0.6%.
The ONS' director of economic statistics, Darren Morgan, said there were some reasons to be positive.
He said: “Earnings continue to grow in cash terms, with basic pay growing at its fastest since current records began.”
“Coupled with lower inflation, this means the position on people’s real pay is recovering and now looks a bit better than a few months back,” he added.
But shadow work and pensions secretary Jonathan Ashworth said: “These figures confirm once again that the Tories are failing working people and businesses across Britain.
"Families are struggling to get by, there are record numbers of people out of work due to long-term sickness, and the employment rate for over-50s is still below pre-pandemic levels – yet Tory ministers have no solutions to get people back to work."
Chancellor Jeremy Hunt said: “Thanks to the action we’ve taken in the jobs market, it’s great to see a record number of employees."
“Our ambitious reforms will make work pay and help even more people into work – including by expanding free childcare next year – helping to deliver on our priority to grow the economy,” he added.