- U.K. 42-Year Low Unemployment Rate Fails to Spur Wage Growth
U.K growing job creation pushed the unemployment rate to more than four decades low but failed to spur wage growth enough to maintain workers’ standard of living.
According to the Office for National Statistics, ONS, inflation adjusted wage fell 0.4 percent, while basic wages grew 2.1 percent year-on-year in the three months through July. This is below the 2.2 percent projected by economists.
The figures further highlight the challenges facing the Bank of England policy makers over interest rate decision. Those arguing to leave the benchmark rate at a record low of 0.25 percent point to the growing stress on consumers due to the pound-driven increase in prices.
While the few others pushing for rates hike are doing so to curb surging inflation rate that is now running close to 3 percent. Almost 1 percent more than the 2 percent target of the Bank of England.
The unemployment rate improved to 4.3 percent, the lowest in 42 years and below the Bank of England’s equilibrium rate, said the ONS.
Experts believed businesses are not raising wages due to Brexit uncertainty and companies trying to maintain current wage level to offset rising production costs.
The number of employed people surged 181,000 to 32.1 million in the last three months, representing the biggest jump in job creation since the end of 2015. Unemployment rate plunged by 75,000 to 1.46 million, the lowest drop in two years. Also, inactivity declined.
The odds of the Bank of England raising rates this week surged after data showed inflation rate surged to 2.9 percent year-on-year in August.