UK pay rises remain low despite unemployment rate falling to 5.2%
Wage growth across the economy has slowed to 2% despite continued strength in job-creation, underlining the financial challenges facing Britain’s workers in the run-up to Christmas.
The Office for National Statistics (ONS) said that average wages grew at an annual rate of 2% in the three months to October.
That marked a significant weakening from the 2.4% growth seen in the previous three-monthly period. Sterling fell after the news, which suggests wage inflation has weakened, undermining the case for an imminent rate rise from the Bank of England.
Once bonuses were included, pay growth in the three months to October was still just 2.4%, down from 3% over July to September, the ONS said.
With inflation running at just 0.1%, living standards are still rising, on average. But anaemic pay growth undermines hopes that household balance sheets will continue to improve after the long post-recession squeeze that saw pay flat or falling for several years.
Frances O’Grady, general secretary of the TUC, said: “With living standards still not fully recovered, many families will be worse off this Christmas than they were before the recession. For the recovery to deliver for everyone, we need stronger growth in pay and productivity in 2016.”
Pay has remained weak, despite the otherwise strong performance of the labour market. Unemployment fell by 110,000 over the latest three month period, the ONS said, taking the unemployment rate to 5.2%, the lowest level since early 2006.
The share of the working-age population in employment hit a fresh record high. “The employment rate (the proportion of people aged from 16 to 64 who were in work) was 73.9%, the highest since comparable records began in 1971,” the ONS said.
George Osborne, the chancellor, stressed that his “national living wage”, which will see the minimum wage increase by 50p an hour for the over-25s in April, would help to underpin pay.
“Our plan for a more prosperous future is delivering for working people with pay packets growing, and the new National Living Wage will deliver a further boost next year,” he said.
