The employment rate reaches a near all-time high – but pay continues to fall

The UK unemployment rate has dipped below two million for the first time since 2008.

The number of people in work between June and August was 30.76 million, and there were 1.9 million unemployed people.

The percentage of people aged 16-64 in work is now 73%, not far from an all-time high of 73.2% in 2004-2005.

The Office for National Statistics figures show there were 154,000 fewer unemployed people than in the previous three months, and 538,000 fewer than the year before. This is the biggest annual drop in unemployment on record.

However, pay is still lagging far behind inflation, even after inflation fell this week to 1.5%. The ONS figures also revealed average weekly pay grew by 0.9% - which is equivalent to a fall in real terms.

This indicates employers are more willing to take on staff but pay them less than a year ago. Some people are putting this down to a fall in productivity – however, productivity is unlikely to improve while wages stay supressed.

Employment vs pay graph

This chart shows while the employment rate has risen (purple), pay has fallen (yellow). Inflation is also marked (red) – showing the two points since mid-2009 where workers have received a real term, above inflation pay rise (shown as green stars).

Is the rising employment rate good news? Let us know on Facebook or in the comments below.

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Readers' comments (2)

  • " however, productivity is unlikely to improve while wages stay supressed.!"

    Well that's a nice factual comment! Why shouldn't productivity rise, if methods are improved for production, if more efficient machinery is used, if waste is reduced and most of all if production is increased then efficiencies of scale will improve productivity.

    Only once productivity is improved can wages rise, Remember the rest of Europe (main trading partners) are still in a recession. So less left wing nonsense please stick to facts.

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  • Well said Brian M.
    1. You'd expect the mean and median salary to fall if lots of new jobs were created at the lower end of the pay scale. If not to fall then to hold back the average increase. The question intelligent commentators must ask is what is the growth excluding the new jobs.

    2. The average that you (and everyone) reports on is therefore not a reflection necessarily of whether someone's wage has actually risen or not, which spreads gloom nationally when actually everyone knows what their individual circumstance is.

    3. Since the top 3% of earners represent about 15%+ of the total earnings then their possible decreases can have a significant impact on the 'average'. So when you say 'average' it sounds like it means 'everyone' to the uneducated - so be as specific as you can be.

    4. As Brian points out why should anyone expect anything other than a fall in living standards given the recent past global economic downturn (which by the way was/is inevitable)? Surely an intelligent commentator would reflect on how much worse things could have been and how well 'we' are doing relative to many other European neighbours.

    5. Living standards generally SHOULD have dropped - much of the 'gain' in preceding years was built on credit. In hard times shouldn't you expect to eat no takeaway pizza, drink tap water, not eat out. Is buying at Lidl or buying own brands a drop in living standards? Buying petrol (if you drive) at the lowest price etc.

    6. Please be aware that a 2% increase in prices does not normally require a 2% increase in wages to pay for it! No one ever mentions this? This is more relevant for those on lower incomes who pay less tax.
    Assuming expenditure is less than earnings (which it should be for everyone) then a 2% increase in prices might mean £8 extra per week whilst that could be covered by 1.5% increase in earnings.

    7. Food and fuel have fallen - these are variables that are more relevant than some other housing costs which are fixed for most people for a period of time so changes are for new users and often don't effect someone's 'average' outgoings.

    So much more to say but basically it comes down to not exploiting statistics and instead educating the largely ignorant reader/voter.

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