Thursday, March 16, 2017

Stagnant wage growth

The Office for National Statistics (ONS) said the unemployment rate fell to 4.7% - it has not been lower than that since the summer of 1975. The ONS also released data on the number of people on zero hour contracts in their main job, which rose by 101,000 between October and December to 905,000. This is equal to 2.8% of all people in employment.
However, wage growth has slowed to 2.3% (excluding bonuses) from 2.6% in the previous three-month period. The latest data showed that wages are growing at the slowest rate since April of last year.
"This weakness was broad based, with wage growth moderating in the financial and business services, distribution, construction and public sectors," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
Wages are rising above the rate of inflation, which is currently 1.8%, but the gap has narrowed.
Paul Johnson, director of the Institute for Fiscal Studies (IFS) warned that wages were unlikely to be higher in the next five years.
He said: "On current forecasts average earnings will be no higher in 2022 than they were in 2007. Fifteen years without a pay rise. This is completely unprecedented."

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