Member Article

Shock fall in UK wages despite employment being on the rise

Figures released by the Office for National Statistics have shown that unemployment is at its lowest since 2009, at a rate of 6.4%, compared with 6.5% last month.

The number of people in work rose 167,000 on the previous three months to 30.6 million, with 132,000 fewer people out of work, at 2.08 million people and youth unemployment fell by 206,000 over the last year.

However the ONS figures also showed that wages, including bonuses, fell by 0.2%. Excluding bonuses, wages rose by 0.6% – the slowest growth rate since 2001, when records began.

The Bank of England indicated that the squeeze on households will last until the year end as it halved its wage growth estimate for 2014 to 1.25%, below an inflation rate running at 1.9%.

Responding to the quarterly inflation report from the Bank of England, TUC general secretary Frances O’Grady said:

“The combination of rising employment and falling pay growth suggests the economy is very good at creating low-paid jobs, but struggling to create the better-paid work we need for a fair and sustainable recovery.

“It is hugely concerning to hear that the Bank has cut its forecast for wage growth in half. The economy’s getting bigger but not better with Britain’s pay squeeze now set to continue even longer.

“It’s not just wage stagnation that’s pushing down incomes, living standards are falling because so many of the new jobs being created are low-skilled, don’t have enough hours, or are in low paid self-employment.

“It deeply worrying that the Bank says ‘average household real incomes have yet to stage a meaningful recovery’. If people don’t have money in their pay packets to spend on goods and services it’s hard to see how we can return to sustainable growth.

“Consumer spending is holding up for now despite people’s real pay falling, but the danger here is people running down savings or increasing their debts.

“That’s why Britain needs a pay rise, because a recovery built on stronger household incomes will be a recovery built to last.”

Deputy Prime Minister Nick Clegg, said: “The continued fall in unemployment provides yet more proof that the tough decisions we have made in government have been the right ones to build a stronger economy in a fairer society.

“I am particularly proud to see a fall in youth unemployment of over 100,000 in the last quarter, the biggest since comparable records began over 20 years ago.

“The coalition will continue to strive to create the conditions for the economy to thrive, while ensuring everyone has a fair opportunity to take advantage of the recovery – for instance by lifting around 3 million people out of tax, narrowing the north-south divide through Growth Deals and the Regional Growth Fund, and boosting apprenticeships to help young people take advantage of the opportunities of a recovering economy.”

This was posted in Bdaily's Members' News section by Clare Burnett .