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| Rising employment fails again to boost wages | Rising employment fails again to boost wages |
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| A sharp rise in the number of jobs and a fall in unemployment could only lift average wages by a fraction in May, leaving workers to suffer another cut in living standards, according to official figures. | A sharp rise in the number of jobs and a fall in unemployment could only lift average wages by a fraction in May, leaving workers to suffer another cut in living standards, according to official figures. |
| Unemployment fell to 6.5% of the workforce and employment edged higher to another record of 30.6m, but a 0.7% rise in wages, excluding bonuses, was well short of the 1.5% May inflation rate. Including bonuses, wage growth was just 0.3%. | Unemployment fell to 6.5% of the workforce and employment edged higher to another record of 30.6m, but a 0.7% rise in wages, excluding bonuses, was well short of the 1.5% May inflation rate. Including bonuses, wage growth was just 0.3%. |
| Average wages have remained below inflation during the recovery of the last 18 months. Forecasters have predicted an imminent return to above-inflation rises in wages over the last year, only for each month's official figures to prove them wrong. A rise in inflation last month to 1.9% and the fall in total average wages from 0.8% to 0.3% appears to show the situation worsening. | Average wages have remained below inflation during the recovery of the last 18 months. Forecasters have predicted an imminent return to above-inflation rises in wages over the last year, only for each month's official figures to prove them wrong. A rise in inflation last month to 1.9% and the fall in total average wages from 0.8% to 0.3% appears to show the situation worsening. |
| The Office for National Statistics argues that the cut in the 50p top rate of tax to 45p in 2013 triggered a shift in bonus payments that make comparisons with last year difficult. However, as the rise in regular pay to 0.7% shows, 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." | 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." |
| TUC general secretary Frances O'Grady said many of the new jobs being created are of low-quality, and low productivity: | TUC general secretary Frances O'Grady said many of the new jobs being created are of low-quality, and low productivity: |
| "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. | "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." | "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." |
| A survey of household finances by the financial data provider Markit paints an equally gloomy picture following a fall in perceptions of overall financial wellbeing. | |
| The survey firm's household finances index stands at a six-month low, with households on the lowest incomes the most fearful of a worsening outlook for family budgets. | |
| James Knightley of ING said he supported the ONS view that distortions last year were artificially depressing official wages figures and they would soon return to around 2-2.5%, which he believes is the experience of most workers. | James Knightley of ING said he supported the ONS view that distortions last year were artificially depressing official wages figures and they would soon return to around 2-2.5%, which he believes is the experience of most workers. |
| Howard Archer, chief UK economist at IHS Global Insight, said the Bank of England was likely to remain concerned about the trend for below-inflation wages growth. | Howard Archer, chief UK economist at IHS Global Insight, said the Bank of England was likely to remain concerned about the trend for below-inflation wages growth. |
| He said: "Following on from the rise in consumer price inflation to 1.9% in June, the further marked drop in unemployment will likely fuel expectations that the Bank of England will be raising interest rates before the end of 2014. | He said: "Following on from the rise in consumer price inflation to 1.9% in June, the further marked drop in unemployment will likely fuel expectations that the Bank of England will be raising interest rates before the end of 2014. |
| "However, ongoing very low earnings growth and some recent signs that growth could be losing momentum (a marked relapse in industrial production and construction output in May as well as a soft BRC retail sales survey for June) highlights the fact that any interest rate hike this year is far from a done deal," he added. | "However, ongoing very low earnings growth and some recent signs that growth could be losing momentum (a marked relapse in industrial production and construction output in May as well as a soft BRC retail sales survey for June) highlights the fact that any interest rate hike this year is far from a done deal," he added. |
| Unemployment fell 121,000 to 2.12m in the three months to May, the lowest since October 2008. The number of people who have left the unemployment register over the last year hit 383,000, compared to a 929,000 rise in employment, which economists attribute to a mix of women returning to work, migrant professionals taking up jobs in London and the south-east, and the steady rise in self-employment. | Unemployment fell 121,000 to 2.12m in the three months to May, the lowest since October 2008. The number of people who have left the unemployment register over the last year hit 383,000, compared to a 929,000 rise in employment, which economists attribute to a mix of women returning to work, migrant professionals taking up jobs in London and the south-east, and the steady rise in self-employment. |
| Job vacancies were at a post financial crash high of 648,000, which some employers groups say indicates a growing problem of skill shortages. | Job vacancies were at a post financial crash high of 648,000, which some employers groups say indicates a growing problem of skill shortages. |
| However, the vacancy total remains well short of the 900,000 pre-crash level. | However, the vacancy total remains well short of the 900,000 pre-crash level. |
| Unemployment fell in all regions bar the north-east, which recorded a rise of 5,000 to 129,000. This left the region with an unemployment rate of 9.6%, the highest in the UK. | Unemployment fell in all regions bar the north-east, which recorded a rise of 5,000 to 129,000. This left the region with an unemployment rate of 9.6%, the highest in the UK. |
| Minister for employment, Esther McVey, said: "An important milestone has been reached in our country's recovery. With one of the highest employment rates ever, it's clear that the government's long-term economic plan to help businesses create jobs and get people working again is the right one. | |
| "With an employment rate which has never been higher, record women in work and more young people in jobs, the resilience of the country during the downturn is being rewarded. We know there is more to do, and the best way to do so is to go on delivering a plan that's creating growth." |