UK employment rises yet wages fail to budge

UK employment rises yet wages fail to budge

Good news for job seekers as the latest report shows UK’s unemployment figures fell again last month in June 2014. However despite the accumulation of jobs at an unprecedented pace, the current recovery is failing to lift wages. Those in work are still struggling against the cost of living and rise in inflation.

According to the ONS (Office for National Statistics) the number of people in work rose 254,000 in the first quarter of 2014 to 30.64m. This coincided with the unemployment rate falling to 6.5% of the workforce and the proportion of those in work aged 16- 64 reached 73.1% since the start of January. A rate that was only previously recorded in 1974 and 2004-05.

However, unfortunately average wage rises have remained stubbornly below inflation during the recovery. Excluding bonuses, average earnings growth slipped to 0.7 per cent, down from 0.9 per cent, whereas consumer price inflation rose to 1.5 per cent in May. A rise in inflation occurred again last month in June to 1.9% and the fall in total average wage increases from 0.8 per cent to 0.3 per cent, demonstrating that the situation isn’t getting any better.

david cameronAccording to a report in The Financial Times, David Cameron, admitted in the House of Commons that it was “disappointing” that pay was not rising faster, but said he was proud of the fact that 1.8m more people were in work than when the government came to office.

Whereas Labour leader, Ed Miliband,  commented recovery was “not benefiting most working people who are working harder for longer, for less”.

The ONS argued that the cut in the 50p top rate of tax to 45p inb 2013 prompted people to delay their bonus payments, making comparisons difficult. However, as the 0.7% rise in regular pay demonstrates, the decline in real wages is only alleviated a little when bonuses are excluded.

Peter Patterson, deputy chief economist at the ONS, said: “The striking divergence between employment and pay continues. While the employment rate has never been higher, the average weekly earnings of employees excluding bonuses have risen by only 0.7% over the past year.”

 

 

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