Un­em­ploy­ment falls to new low but wages re­main squeezed

The Daily Telegraph - Business - - Front Page - By Tim Wal­lace

UN­EM­PLOY­MENT tum­bled to a new 42-year low in July, with more Bri­tons than ever be­fore in work.

Pri­vate and pub­lic hir­ing picked up in the three months to July with em­ploy­ment ris­ing by 181,364, the fastest pace of jobs growth since 2015. More than 31.2m peo­ple are now in work, while job­less­ness dropped to 1.46m, or 4.3pc – a low not seen since mid-1975.

Em­ploy­ers ap­pear keen to keep on hir­ing as the Of­fice for Na­tional Sta­tis­tics found 774,000 va­can­cies in Au­gust, a mod­est rise on the month.

The num­ber of pub­lic sec­tor work­ers also rose for the first time in a year to 5.44m.

That re­sult in jobs comes de­spite the slow­ing rate of eco­nomic growth, and has been ac­com­pa­nied by un­ex­pect­edly low pay rises. Av­er­age weekly pay is up by just 2.1pc on the year to July.

Work­ers in the pri­vate sec­tor earn an av­er­age of £503 a week, up 2.2pc on the year, while those in the pub­lic sec­tor re­ceived £512 a week, a rise of 1.5pc.

Over the same pe­riod prices rose by 2.6pc and picked up fur­ther in Au­gust, mean­ing work­ers are get­ting worse off in real terms. Stephen Clarke, pol­icy an­a­lyst at the Res­o­lu­tion Foun­da­tion said: “There is a risk that the pay squeeze could get worse be­fore it starts to gets bet­ter. Un­less things im­prove we could be look­ing at 15 years of lost pay growth.”

As a re­sult, the Bank of Eng­land faces a co­nun­drum in its in­ter­est rate de­ci­sion to be pub­lished to­day. Of­fi­cials had ex­pected wage in­fla­tion would take off when job­less­ness fell to un­der 4.5pc, which would en­able pol­i­cy­mak­ers to start rais­ing rates.

But that has not yet hap­pened, push­ing Mark Car­ney to keep rates on hold at 0.25pc. The drop in un­em­ploy­ment has been spread across most of the UK, but north-east and south-west Eng­land both suf­fered rises.

Mark Car­ney, the Gov­er­nor of the Bank of Eng­land, has an in­ter­est rate co­nun­drum

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