Employment Data Raises Questions About UK Jobs Market

UK unemployment has fallen to 4.5 percent, which is the lowest since 1975, and the employment rate has also peaked, reaching the highest ever recorded rate at 74.9 percent. On paper, this means we have the tightest labour market for almost 50 years, but it appears that workers are not better off. Indeed, after adjusting for inflation they are worse off.

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shareprices.com - Wednesday, August 09, 2017

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Employers say that there is a near record-breaking number of job vacancies, and there is a skills shortage making it difficult to fill them. Average wages are not growing, and inflation is on the increase as the pound’s weakness has caused the cost of imports to rise.

For the three months in the run up to May, pay - after adjustment to account for inflation - has fallen by 0.5 percent, year-on-year. Pay is still a long way from recovering to the levels that it was prior to the financial crisis - to the point that on average, employees are earning £15 less per week before tax and other deductions.

The Bank of England says that it expects the squeeze on living standards to continue for the rest of the year, and that it expects to see inflation peak at around three percent in the autumn, while wage growth is likely to stay at an average of just two percent this year. The Bank does not expect to see much improvement over the next year, and considering in the past it has typically been over-optimistic, this does not bode well for workers.

 

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