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Unemployment down but wages and productivity continue to struggle

Written by Ryan McChrystal on Wednesday, 17 September 2014. Posted in Finance

Latest ONS figures show unemployment down to 6.2% - its lowest level since 2008 - but average wage increase lags behind

Unemployment down but wages and productivity continue to struggle

The sunscreen is well and truly back out as Britain is currently enjoying one of the warmest Septembers on record. But it’s not just the weather that’s peachy this month – UK unemployment has fallen at the fastest rate for more than a quarter of a century.


According to the Office of National Statistics’ (ONS) latest Labour Market Statistics for the quarter ending July, unemployment has fallen by 146,000 to 2.02m, down a sizeable 468,000 from last year and now standing at its lowest level since the quarter ending November 2008. With unemployment now standing at 6.2% – its lowest level in almost six years – the ONS figures also show that employment is up by 74,000 and the number of people claiming Jobseeker’s Allowance in August has fallen considerably.


On the not-so-sunny side, however, the number of actual jobs increased by the lowest quarterly rate in almost a year – and neither wages nor productivity are improving at a rate that really fills one with optimism. With wages a fairly trusty indicator of economic recovery, the average wage increasing by 0.6% this quarter (to £478, including bonuses, per week) is hardly worth cracking the champers out for. Your average worker certainly won’t be feeling much benefit, that’s for sure. This less-than-impressive wage growth can be attributed to the expansion of low-pay sectors, which remove a lot of people from the dole queue but keep overall earnings and productivity suppressed.


"Figures vary from month to month but employment has continued to grow, perhaps not as quickly as in the last three or four quarters, but still by enough to keep pace with a growing population and deliver a big reduction in unemployment,” said Mark chief economist at the Chartered Institute of Personnel and Development (CIPD). "At a time when many other European countries are struggling to create jobs, this is a considerable achievement.


“However, the new figures also show that pay growth remains very subdued and well below all measures of price inflation, so the improvements in productivity and pay that we are all looking for are still not in sight. Employers need to take advantage of the currently favourable recruitment climate to invest in up-skilling their business and its people."


While the forecast looks bright for many in the UK, some are still feeling under the weather.  

About the Author

Ryan McChrystal

Ryan McChrystal

In a previous life McChrystal wrote about asset management in the Middle East. A history and politics graduate from the north of Ireland, he now focuses his efforts a little closer to home. 

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