You are here: Home - Household Bills - News -

UK labour market robust but real wages stagnate

0
Written by: Paloma Kubiak
12/04/2017
The number of people in work rose in the three months to February 2017 but annual earnings growth has slowed to levels last seen in 2014, official statistics reveal.

The employment rate for the period was 74.6%, the joint highest since comparable records began in 1971, according to the Office for National Statistics (ONS).

There were 31.84 million people in work during December 2016 and February 2017, 39,000 more than the preceding quarter and 312,000 more than recorded in the previous year. The rise has been fueled by more self-employed workers, fewer women retiring between the ages of 60 and 65 and an increase in workers in family businesses who do not receive a formal wage but benefit from the profit of that business.

Unemployment over the three months was 4.7% down from 5.1% recorded a year earlier, with a total of 1.56 million people not in work. This level is 45,000 fewer than for the three months to November 2016 and 141,000 fewer compared with a year earlier.

Wage growth was recorded at 2.3% including bonuses (2.2% excluding bonuses) which compares to a growth rate of 2.2% between November 2016 and January 2017. Average weekly earnings in real terms (adjusted for inflation) increased 0.2% (including bonuses) and 0.1% (excluding bonuses), compared with a year earlier. These are the lowest annual growth rates seen since July and October 2014.

The figures reveal the average weekly pay for employees in the UK stands at £509, up from £380 a week recorded back in January 2005.

Ben Brettell, senior economist at Hargreaves Lansdown, said with CPI inflation steady at 2.3%, today’s labour market numbers reveal real wage growth now stands at zero.

“With inflation forecast to carry on rising – the Bank of England predicts a peak around 2.8% early next year – real wages are likely to start falling soon, squeezing household budgets. The UK economy is heavily reliant on consumer spending and this could prove a headwind for economic growth as we move through the year,” he said.

“Notwithstanding relatively weak wage growth, the UK labour market looks fairly robust – for now at least. The employment rate and the number of vacancies are at record highs, while the unemployment rate is unchanged at 4.7% – the last time it was lower was in 1975. Unemployment is expected to rise later this year as Brexit-related uncertainty deters firms from hiring more workers, but at least any rise will be from historically low levels.”

Brettell also said that the labour market may be showing signs that things are about to become tougher.

He said: “The claimant count, which in a quirk of the data is a more recent figure than the unemployment rate, showed the number of unemployment benefit claimants rose by 25,500 to 765,400 in March, the largest increase since July 2011. Economists had expected a small fall. The claimant count figure is often viewed as an early warning signal of a potential economic downturn, so this surprise increase could be a sign that labour market conditions are about to become tougher.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2215069-graduate-student
Student loan interest rates set to soar by 33%

Current students and a large number of graduates will see interest rates on their student loans rocket by up to...

Close