Published: Wed, October 18, 2017
Money | By Armando Alvarado

United Kingdom wages continue to lag inflation despite low unemployment

United Kingdom wages continue to lag inflation despite low unemployment

LONDON (AP) - Official figures show that household incomes in Britain continue to be squeezed even though the country's unemployment rate remains at its lowest level in 42 years.

Kathleen Brooks, research director at City Index, suggested the Bank of England's monetary policy committee, which is widely expected to raise interest rates in November, now faces a quandary.

On a brighter note, unemployment continued to fall over the period, dropping by 52,000 to 1.44 million.

"Total earnings in cash terms grew slower than prices over the a year ago, meaning their real value continues to fall, down 0.3 per cent over that period", Hughes added. That lowered the unemployment rate by 0.2 percentage point on a quarterly basis to 4.3 percent, its joint-lowest since 1975.

He said: "Our economy is helping to create full time, permanent jobs which are giving people across the United Kingdom the chance of securing a reliable income".

The unemployment rate was 4.3% in the three months to August, unchanged from the previous reading.

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"We've boosted the income for people on the lowest pay by increasing the National Living Wage and delivered the fastest pay rise for the lowest earners in 20 years".

"With little slack in the labour market, the degree of mismatch between the skills of the remaining workers and the skills demanded by firms will widen, this should underpin a modest acceleration in wage growth over time", said economist Kallum Pickering at Berenberg Bank. Employment growth in the latest three-month period was driven mainly by women, with a corresponding drop in inactivity.

There were 8.81 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 17,000 fewer than for March to May 2017 and 13,000 fewer than for a year earlier.

TUC general secretary Frances O'Grady - who is calling for the Chancellor to ditch the cap on many public sector workers' earnings - said: "Pay packets are taking a hammering".

Month-on-month, consumer prices gained 0.3 percent in September, as expected.

"Britain desperately needs a pay rise".

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