Welcome news on jobs 'not filtering through to pay packets'

By agency reporter
September 17, 2017

The UK jobs market continues to perform strongly but it is failing to filter through into wages as the pay squeeze continues, says the Resolution Foundation,responding to the latest labour market figures.

Employment hit a new record high in the three months to July, while unemployment and economic inactivity reached fresh lows. The quality of job creation is positive too – full-time employee roles account for 92 per cent of net job creation over the last 12 months.

The Foundation notes that the civil service has recorded its biggest annual increase in employment since 2009, which is likely to be due to hiring by departments bulking up in preparation for Brexit. By contrast employment in local government is at its lowest level since records began in 1999.

The positive news on jobs has failed to translate into pay packets. While the pay squeeze eased to -0.4 per cent off the back of inflation easing in June and July, the increase in inflation last month suggests that the pay squeeze could tighten again in the coming months. The Foundation notes too that average weekly wage remains £16 a week below its pre-crisis peak in 2008.

Stephen Clarke, Policy Analyst at the Resolution Foundation, said: “The UK jobs market continues to perform strongly. The fall in inactivity is particularly encouraging as it shows more and more people are being drawn into the labour market.

“However, the welcome news on jobs is failing to feed through into pay packets. And with the pace of inflation increasing again there is a risk that the pay squeeze could get worse before it starts to gets better.

“The scale of our long-standing pay disaster means that wages are still £16 a week lower than their 2008. Unless things improve we could be looking at 15 years of lost pay growth.”

* Resolution Foundation http://www.resolutionfoundation.org/

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