Wages growth lowest since 2001

Slow wage growth

UK unemployment has fallen to its lowest level in nearly six years, but wage increases are at their lowest since 2001, according to the Office for National Statistics (ONS).

The number of people out of work fell by 121,000 to 2.12 million in the three months to May 2014. The rate of unemployment also fell, from 6.6% to 6.5% over the same period.

The employment rate stands at 73.1%, according to the ONS, with 78% of men in work and 68% of women. This is equal to the record rate of employment set in 2005, Prime Minister David Cameron has claimed.

The number of young people (aged 16 to 24) unemployed also decreased this quarter, from 882,000 between December 2013 and February, to 818,000 between March and May.

However, wage growth has been in steady decline since the first quarter of 2014.

Between January and March, average wage rises – including bonuses – were 1.9%. Between March and May, rises, including bonuses, were only 0.3% up on the level they were a year ago; excluding bonuses they were up 0.7%.

These rises are well below inflation – official figures released earlier this week showed that the consumer prices index measure of inflation rose to 1.9% in June from 1.5% one year earlier.

The official figures also echo XpertHR’s latest survey of pay awards, which found that the median increase in pay deals to be 2% in the three months to the end of May, down from 2.5% in the previous quarter.

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.”

Earlier this week, a report by thinktank the Resolution Foundation pointed out that the fall in “real” wages may be worse than predicted, as ONS data fails to take into account the earnings of the UK’s thousands of self-employed people.

Reflecting the buoyant employment levels, David Rudick, vice president of international markets at job board Indeed.com has witnessed an uptake in searches for vacancies, and expects this to broaden out internationally in the coming quarters.

He said: “With the current buoyancy of the UK jobs market in mind, we would expect to see an increase in searches from international jobseekers over coming months, boosting the UK’s profile as an international labour destination.”

3 Responses to Wages growth lowest since 2001

  1. Avatar
    Carl Jones 16 Jul 2014 at 8:36 pm #

    “Fallen”? Part time and zero hours. The fact is, Britain is becoming a much poorer country. The economic date has been so massaged that it seems everyone has lost all their reference points. As some point pay will rise. Inflation is taking off here and in the US. But you can be sure the illegal cabal will not allow people to have more money in their pockets.

    Britain has a terrible trade situation. Remember when the BBC News used to report with some hype that Britain was a few million in the red? Well, today we are £6, £7 and £9 billion in the red each month!! If the sheeple get more money in their pockets, they will spend it on imported goods, foreign holidays and foreign holiday homes…clearly, the powers that be won`t allow this. We can see this with the travel restrictions and the designed passport backlog. On top of this they want to cut the school summer holidays…an illustration of just how bankrupt things really are.

  2. Avatar
    CommonSense 21 Jul 2014 at 2:24 pm #

    For a start there needs to be a living wage as an absolute minimum. I understand that there are 2 sides to the argument and that it is going to cost businesses more but work has to pay. You cannot expect people to be motivated by work if they cannot pay their bills at the end of the month, who would be? Or for the government to top up low paid workers with tax credits as the employer should pay enough to cover this in the first place. Unfortunately there are plenty of companies that pay the minimum wage and then that is it for the staff, no increases in line with inflation. Your only hope of a pay increase is to change employers or see if you can negotiate your terms only to be told that everyone is on the same wage and it would be unfair to have people on different wages.

    Perhaps wage increases are not the only thing that needs to be reviewed in order for people to have a better standard of living. There needs to be a general review of prices of goods and how much things cost as if these continue to increase then increases in wages mean nothing to the person receiving them as they will feel no difference in their pocket.

    The culture of business needing to make millions of pounds in profit has fuelled this problem as they squeeze everything in the chain to ensure their profits grow for the shareholders etc. It is time for a cultural change on this but the problem is, those people quite like getting lots of bonuses and having money and profit (Not a bad thing if you are paying your staff a decent wage and not ripping of your customers I might add before the “businesses need to make money” comments come) Although unfortunately this is not the case in the majority of cases.
    There are plenty of big businesses that make huge profits, undercut smaller businesses and don’t pay their staff even the living wage. It’s about time that these companies start contributing more to everyone. Including paying their taxes.

  3. Avatar
    denislenihan 24 Jul 2014 at 10:18 am #

    Strong trade unions lead to higher pay for workers – increased pay leads to increased spending due to increased disposable income – leads to a stronger economy and a fairer society. Trade unions are the key!