United Kingdom’s jobless rate holds at 42-year low amid pay squeeze
LONDON: British unemployment remains at a 42-year low, official data showed – but wages growth remains far below the overall UK inflation rate, hurting workers’ purchasing power.
The unemployment rate stood at 4.3 per cent in the quarter to the end of September, the Office for National Statistics (ONS) said in a statement.
That was unchanged from the three months to August, while the rate remained at the lowest rate since 1975.
Average weekly earnings meanwhile rose by 2.2 per cent year-onyear in the three-month period to September, lagging behind Britain’s annual inflation rate of 3.0 per cent.
And the ONS also revealed that average weekly earnings in real terms – or adjusted for inflation – fell 0.4 per cent from a year ago.
“The squeeze on real incomes continues,” noted Hargreaves Lansdown economist Ben Brettell.
“Ultimately the pay squeeze could be ended by falling inflation, rather than an acceleration in wage growth. Yesterday’s ( inflation) numbers undershot expectations ... This could be a sign the inflationary spike is close to an end.”
The Consumer Prices Index 12month inflation rate held at a fiveyear high of 3.0 per cent last month as rising food prices offset falling petrol costs, the ONS said Tuesday. Analysts’ forecast had been for a slight rise to 3.1 per cent.
Inflation has nevertheless jumped this year as a Brexit-hit pound ramped up import costs, which led the Bank of England to raise its key interest rate for the first time in a decade earlier this month.
“Consumers continue to face a serious squeeze on purchasing power,” added Howard Archer, chief economic advisor at the EY ITEM Club research group.
The ONS added Wednesday that the number of unemployed sank to 1.4 million at the end of September – down 182,000 on a year earlier.
At the same time however, the number of people in work has fallen by the largest amount in more than two years.
Employment slid 14,000 in the quarter to September compared with the previous three months, in the largest drop since mid-2015.
Wednesday’s jobless data was published one week before British finance minister Philip Hammond is due to unveil his annual budget.
The head of Britain’s union umbrella group urged Chancellor of the Exchequer Hammond to deliver measures to help boost incomes.
“This is the seventh month in a row that prices have risen faster than wages. But ministers are still standing on the sidelines,” said TUC General Secretary Frances O’Grady.
“Running the economy is not a spectator sport – the Chancellor must have a game plan to give Britain a pay rise in next week’s budget.”
However, the Conservative government’s employment minister Damian Hinds argued that the strong economy was driving employment close to record levels. — AFP