United Kingdom wage growth falls behind inflation

EUR  USD 1.1000 U.K. Inflation and JPY as the Favored Funding Currency

EUR USD 1.1000 U.K. Inflation and JPY as the Favored Funding Currency

Workers are facing a living standards "squeeze" as wage rises fall below inflation despite record numbers in work, the Government is being warned.

March's unemployment rate of 4.6 per cent was the lowest figure recorded since mid-1975.

Alpesh Paleja, the CBI's principal economist, said: "Weakening productivity and slower pay growth, coupled with rising inflation, will continue to squeeze real household earnings".

Unemployment in the United Kingdom has fallen to its lowest rate in 42 years while the tally of people in work has hit a new, all-time high, according to figures from the Office for National Statistics (ONS).

Pay including bonuses rose at an annual rate of 2.3% in the three months to February, according to the ONS. This meant that wages adjusted for inflation actually dropped by 0.2 percent in the first three months, the first fall since the third quarter of 2014.

Figures from the Office for National Statistics (ONS) have shown that unemployment in the United Kingdom has fallen to its lowest rate in 42 years whilst the number of people in work has hit an all-time high.

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The ONS yesterday said that inflation hit its highest level in almost four years in April at 2.7 per cent, as sterling's weakness, electricity price hikes and rising air fares bumped up the cost of living.

The jobless rate in the United Kingdom unexpectedly fell lower in March, although April's claimant count increased more than expected, official data showed on Wednesday.

Between January and March, the number of 16 to 64 year old women in jobs was 70.2%, also the highest rate since records began. Non-UK nationals represent 11.1 per cent of the workforceThe number of non-UK nationals working in the UK increased by 207,000 to a record 3.5 million in the first quarter, representing 11.1 per cent of the workforce.

Paul Hollingsworth, UK economist at Capital Economics, said despite the intensifying squeeze on households, the strength of employment was "one reason to be optimistic that the slowdown in spending won't be too severe". The latest figures on earnings growth are due out later this week.

Average weekly earnings excluding bonuses increased by 2.1%. Inflation now stands at 2.7 per cent - up from 2.3 per cent in March - and above the Bank of England's two per cent target. But even with employers hiring at the fastest pace since last year's European Union referendum shock, the pace of wage growth slowed.

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