News

Record employment although wage growth is slow

British wage growth slowed in the final quarter of 2015, official data by the Office for National Statistics (ONS) has shown. The unemployment rate remained unchanged at 5.1%, the lowest level in 10 years.

The number of people in employment is now around 31.4m, and while some economists expected a bigger rise, there are now more people in work than ever before [1].

The decline in total annual wage growth slowed to 1.9%, although removing salary bonus payments from the data means that wages grew by an average of 2% in the fourth quarter [2].

While low inflation accounted for more disposable household income, the ONS highlighted that total pay growth had fallen sharply since last May’s figure of 3.3% [2].

ONS Statistician, Nick Palmer, said: “While the employment rate continues to hit new highs, and there are more job vacancies than ever previously recorded, earnings growth remains subdued and markedly below the recent peak of mid-2015” [3].

Earlier this month, Bank of England Governor, Mark Carney, signalled that a rise in interest rates would not be imminent as global economic growth has slowed.

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said: “With inflation finally starting to rise again, far stronger productivity growth will be needed if we’re to have any hope of recovering some of the ground lost during the UK’s seven-year pay squeeze” [2].

Chancellor George Osborne said: “It is encouraging that more people than ever have the security of a job and a rising pay packet. With a record number of people in work, and unemployment and youth unemployment reaching 10-year lows, this is further evidence of the need to stick to the government’s long- term plan to deliver economic security” [2].

 

[1] Reuters UK. ‘UK wage growth slows to lowest since February, unemployment rate unchanged’. uk.reuters.com

[2] Telegraph. ‘Sluggish wage growth takes shine off record UK employment’. telegraph.co.uk

[3] BBC News. ‘UK unemployment still at 10-yar low, falling by 60,000’. bbc.co.uk