Average pay falls back to February 2006 levels as jobs market holds steady

 

The latest fall in real pay means that average earnings are no higher than they were back in February 2006, the Resolution Foundation said in response to October’s labour market figures.

Real earnings fell by -0.4 per cent in the three months to August. However, with the rate of inflation having increased since then the Resolution Foundation projects that the pay squeeze will deepen further in the Autumn to around -0.6 per cent. Workers look set to have to wait until 2018 for real pay rises to return.

The pay squeeze comes despite a strong jobs market. Unemployment and economic inactivity are both at 40 year lows, though employment has dipped slightly in the last two months.

Stephen Clarke, Economic Analyst at the Resolution Foundation, said: “Today’s figures confirm the big picture trend that the UK labour market is great at creating jobs, but terrible at raising people’s pay.  The scale of the pay squeeze over the last decade is so vast that people today are earning no more than they did back in February 2006, despite the economy being 4.4 per cent bigger per person since then.”

Ian Brinkley, Acting Chief Economist at the CIPD, commented: “The latest figures again show the subdued pay outlook across the economy, with a 2.2% increase continuing to lag behind inflation. With no end in sight to this squeeze on living standards, many workers will be facing a Christmas period where they will once again be required to tighten their belts. There is little to suggest that wages are responding to low unemployment and higher inflation.

“While the headline employment figure remains strong, there are some signs that the UK labour market may be slowing down in terms of job creation. The rise in employment is mostly down to part-time self-employment, which suggests much of the increase is around marginal work and an increase in temporary jobs. We will have to wait and see if this initial sign becomes a trend, but if it does the UK economy faces a potentially potent mix of falling pay and a stagnant labour market.”

Thursday, 19 October 2017

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Average pay falls back to February 2006 levels as jobs market holds steady
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