Fresh figures issued by the Office for National Statistics (ONS) show unemployment fell by 121,000, to 2.12m million in the three months leading up to May. Coming in at the lowest level in almost six years, the figures provide government with a platform from which to launch further successful reform.
The rate of unemployment fell too, from 6.6% to 6.5% in the 3 months preceding April. This effect was mirrored in the number of people claiming jobseeker allowance in May, which fell by 36,300 to 1.04 million.
According to the figures, 78% of men and 68% of women are in work, yielding a significantly improved employment rate of 73.1%.
Prime Minister, David Cameron, lauded the developments declaring the new rate was equal to record levels of employment set in 2005.
“Today’s figures show more people have the security of a job than ever before. Full employment is a key aim of our long-term economic plan,” he said.
Slow Wage Growth
Latest figures depict the slow, onerous manner in which wages have been rising, in real terms including bonuses, since 2009. Excluding bonuses, average wage increases are at their lowest point since 2001.
Average wages, in the period between March and May, were just 0.3% greater than the same interval a year ago. This throws general public feeling that the UK is climbing out of recession into dispute. Wage growth has been gradually falling since this yearís first quarter, as highlighted by the figures displaying a paltry 1.9% wage growth between January and March.
TUC general secretary Frances O’Grady said: “It’s good to see unemployment falling, but with pay growth falling to a record low, serious questions must be asked about the quality of jobs being created in Britain today.
“If all the recovery can deliver is low-paid, low-productivity jobs – many of which don’t offer enough hours to get by – then it will pass most working people by and Britain’s long-term economic prospects will be seriously diminished.”
The ONS noted that in excess of 4.5 million people were self-employed, following an increase of 404,000 in the past year. This is the largest number of people in self-employment since records began in 1992.
Although the 0.3% annual rise in total pay, including bonuses, has been regarded the lowest growth rate since 2009, the very theme of progression can be disputed.
This could be because many firms held over bonus payments from last year to allow their staff to escape the higher income tax brackets.
As such, pure income, excluding bonuses, might give a clearer indication as to real wage growth. This was up 0.7% on a year earlier ñ an even more staggeringly low rate of growth, not seen since 2001.
From this, we can ascertain that pay continues to dawdle behind inflation ñ giving weight to what Labour refer to as ìa cost of living crisisî.
Moreover, the Resolution Foundation noted that figures on average earnings exclude those whoíre self-employed, numbering over 4.5 million. The Foundation stated that if they were included, “the squeeze on wages since 2008 would be more than 20 per cent deeper than the official figures suggest.”
It is logical to forecast that such low wage growth will adversely impact upon consumer spending, thus keeping interest rates fixed at 0.5% for longer ñ a phenomenon that could stagnate the economy.
However, many financial officials remain optimistic over imminent interest rate rises.
Robert Wood, UK economist at investment bank Berenberg said: “Wage growth remains extremely weak, but that cannot last much longer with unemployment falling this fast. We look for a Bank of England rate hike in November.”