Real UK wages are lagging behind steadily increasing inflation which grew 2.16% over the summer while earnings rose by just 2.1%. These figures follow 7 months of negative pay growth while inflation remains at a 6 year high. Therefore, while the economy is 4.4% bigger per person than 10 years ago, wages are still no higher. For actual people this means that essentials are becoming more expensive and most people in work are considerably worse off. One think tank has estimated that households are whopping £309 worse off than at this time last year.
However, in the same period unemployment fell to a 42 year low. Joblessness is down 4.4% meaning that more people are in employment, studying and retired than at any other time since 1974.
In further good news, zero hour contracts (which provide little stability and no guaranteed hours) now make up 883,000 of all UK jobs – down by 20k since last year. This suggests that jobs are becoming more stable and employers are moving away from the ‘disposable workers’ mentality.
Why isn’t demand for workers driving up wages?
The fall of wages over the same period as unemployment is unexpected. Generally, wages rise as the demand for workers steadily increases. If there are fewer people looking for work, companies must hike wages in order to attract new employees. And for once, Brexit isn’t to blame, other countries such as America and Japan have also seen negligible pay growth.
Today it was announced that two UK banks are to shut hundreds of branches across the country, resulting in a loss of jobs for an astonishing number of people. This is a society where new coffee shops and restaurants sprout up on every corner. It could be that the fall in wages is the result of a loss in higher paying jobs as the country moves towards typically lower paying vocations.