Pay growth and a fall in inflation means that Britain’s pay squeeze is ending, says economists. New figures show the number of people in work has reached a record high of 32.2 million and earnings are growing, according to official figures. However, the wage growth is not outpacing inflation.
The Office for National Statistics says the employment rate rose to 75.3% in the three months to January, which is up from 74.6% a year ago, and the joint highest on record. There were 32.25 million people in work, 168,000 more than for August to October 2017 and 402,000 more than for a year earlier.
For November 2017 to January 2018, the unemployment rate for people was 4.3%; it was last lower in 1975. The unemployment rate for men was 4.2%; it was last lower in 1975 and the unemployment rate for women was 4.4%, lower than for a year earlier (4.6%).
Senior ONS statistician Matt Hughes says: “Employment and unemployment levels were both up on the quarter, with the employment rate returning to its joint highest ever. ‘Economically inactive’ people – those who are neither working nor looking for a job – fell by their largest amount in almost five and a half years.
“Total earnings growth continues to nudge upwards in cash terms. However, earnings are still failing to outpace inflation.”
A move from part time work to full time work has helped increase the earnings figure, says the ONS. The ONS said that including bonuses average earnings in the three months ending in January were 2.8% higher than in the same quarter a year earlier, the highest since September 2015. Excluding bonuses earnings were 2.6% higher.
For January 2018, average regular pay (excluding bonuses) for employees in Great Britain was £482 per week before tax and other deductions from pay, which the ONS says is up from £469 per week for a year earlier. Average total pay (including bonuses) for employees in Great Britain was £514 per week before tax and other deductions from pay, up from £500 per week for a year earlier.
However, despite the end of the squeeze, real weekly earnings are still £15 below their previous peak with the gap not expected to close till well into the 2020s, says think tank the Resolution Foundation. And while the pay squeeze may technically be over, the squeeze on living standards continues, says the think tank.
Unemployment rises for women
For November 2017 to January 2018, there were: 696,000 unemployed women, 49,000 more than for August to October 2017 but 18,000 fewer than for a year earlier.
Ian Brinkley, Acting Chief Economist at the CIPD, says: “It is concerning that the unemployment rate for women has increased significantly and now has overtaken unemployment rate for men. The Government must ensure they’re doing all they can to help more women get into the labour market, including promoting more flexible working styles.”