Inflation eats away at pay
INFLATION has continued to erode the value of people’s pay packets, despite wages rising at their fastest rate in more than 20 years, according to official figures.
The Office for National Statistics (ONS) reported regular pay rose by 5.7 per cent across the UK in the year to September, as people went back to work after Covid furlough.
However with the cost of living rising at its fastest for 40 years, wages rises were dwarfed by inflation, and real pay fell by 2.7%.
Between July and September, the unemployment rate for the 16 to 64 age group was 3.5% in Scotland, up 0.3 points on the previous quarter, with 98,000 Scots out of work.
The UK the unemployment rate was up 0.1 points to 3.6% .
Median monthly pay in October in Scotland for payrolled employees was £2,143, up 5.5% on the previous year, and up 14.2% since February 2020, just before the pandemic.
The Fraser of Allander Institute warned the number of men in Scotland becoming “economically inactive” hit a 20-year high because of increasing rates of ill-health.
More than a fifth of men, 21.1%, were economically inactive in Scotland, up 1.2% on the quarter, compared to a UK rate of 18.1%.
The category includes those not seeking work in the last month and not available for work within the next two weeks, and includes students, carers, the sick and disabled, retired people and “discouraged workers”, who have given up looking for jobs.
Darren Morgan, director of labour and economic statistics at the ONS, said: “The proportion of people neither working nor looking for work has risen again.
“Since the onset of the pandemic, this shift has largely been caused by older workers leaving the labour market altogether, but in the most recent quarter the main contribution has actually come from younger groups.”
He added: “Job vacancies continue to fall back from their recent peak, with increasing numbers of employers now telling us that economic pressures are a factor in their decision to hold back on recruitment. The biggest driver behind the fall came from hospitality, followed by retailing and wholesaling.”
Chancellor Jeremy Hunt said tackling inflation would be his “absolute priority” in tomorrow’s autumn budget statement.
He said: “Unemployment remains near record lows – providing security to families and testament to the resilience of the British economy even in the face of severe global challenges. But I appreciate that people’s hard-earned money isn’t going as far as it should.
“Putin’s illegal war has driven up inflation – an insidious tax that is eating into paychecks and savings.
“Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make. Restoring stability and getting debt falling is our only option to reduce inflation and limit interest rate rises.”
The Scottish Government said the employment rate for women in Scotland aged 16-64 was the highest since the Labour Force Survey series began in 1992, at 75.2%.
SNP employment minister Richard Lochhead said: “The Scottish labour market continues to show resilience in the face of ongoing challenges to the economy with marginal changes over the quarter to the employment, unemployment and inactivity rates.
“We are engaging with the UK Government to urge the use of its reserved powers and financial resources to help people and businesses through this cost-ofliving crisis.”
Labour’s shadow chancellor Rachel Reeves added: “Real wages have fallen again, thousands of over 50s have left the labour market and a record number of people are out of work because they’re stuck on NHS waiting lists or they’re not getting proper employment support.”
Professor Stuart Mcintyre of the Fraser of Allander said the outlook for the Scottish economy was “less positive” than the labour data.
He said: “It is clear that the Scottish economy is heading into an exceptionally challenging period.
“One rising concern is the growing rate of economic inactivity amongst men, now at its highest since 1992. There are a number of reasons, both good and bad, for economic inactivity but a particular worry is the rise in those who are economically inactive because of illness. Addressing some of the health challenges that exist and that limit labour market participation has to be a key objective.”