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Wage rises hit four year high

Published 17/06/2015

The number of unemployed people is expected to drop again today
The number of unemployed people is expected to drop again today

Wage rises have reached their highest rate for nearly four years, official figures showed today.

Total pay climbed by 2.7% compared with a year earlier in the three months to April, the Office for National Statistics (ONS) said.

It was the biggest rise since August 2011, and up from a revised 2.3% in the three months to March.

Ultra-low inflation - which fell to minus 0.1% in April - means the surge in pay is worth more in real terms.

The growth in real wages for the period, at 2.8%, is the highest since October 2007.

Meanwhile, the ONS figures showed unemployment fell by 43,000 to 1.81 million in the three months to April compared to the prior three months while the jobless rate was down to 5.5%, from 5.7%.

The unemployment figure was last lower in the three months to August 2008.

The number of people in work rose to 31.05 million, 114,000 more than in the three months to January.

Numbers claiming unemployment-related benefits in May - under a new measure including both those on Jobseeker's Allowance and some of those receiving Universal Credit - fell 6,500 to 791,800.

This was the smallest fall since February 2013.

ONS statistician Nick Palmer said: "Total pay is now up 2.7% on the year, the sharpest rate of growth since summer 2011.

"Meanwhile employment continues to rise and unemployment to fall, maintaining the general trend of the last three and a half years."

Regular pay - excluding bonuses - was also up by 2.7% for the three-month period. That was its strongest pace since February 2009.

The UK now has an employment rate of 73.4%, up from 73.3% in the three months to January. The data showed that 78.3% of men and 68.6% of women aged 16 to 64 were in work.

Figures showed 5.37 million people were employed in the public sector for March 2015, down 22,000 from December 2014 and 59,000 compared with a year earlier.

It was the lowest figure since comparable records began in 1999.

There were 25.68 million employed in the private sector for March, 136,000 more than in December and 483,000 ahead of a year earlier.

Employment Minister Priti Patel said: "Today's figures confirm that our long-term economic plan is already starting to deliver a better, more prosperous future for the whole of the country, with wages rising, more people finding jobs and more women in work than ever before.

"As the Government for working people, we want to go further and create one nation that is based on security and opportunity.

"We will continue to help businesses create jobs and support those who want to work hard and get on as part of our ambition to achieve full employment."

Labour said the fall in overall unemployment was welcome but pointed out that the figures showed 740,000 young people were still jobless - though this was slightly down on the previous quarter.

Shadow work and pensions secretary Stephen Timms said: "It's clear the Government needs to do far more to give young people the chance to earn a living.

"Ministers are failing to ensure young people get the best start in life."

Howard Archer, chief UK and European economist at IHS Global Insight, said the numbers of jobs added in the economy at 114,000 meant the rate had "slowed appreciably" after the previous month's figures had shown a rise of 202,000.

Vicky Redwood, chief UK economist at Capital Economics, said the pick-up in wage growth "may fade soon given that the labour market recovery seems to be slowing".

The return to real terms wage growth - the gap between pay rises and inflation - follows a period of about six years to 2014 when they had been broadly falling.

It has been supported by a plunge in inflation caused by slumping oil and food prices. Inflation fell below zero in April but turned positive, at 0.1%, in May.

Employment Minister Priti Patel said: " Today's figures confirm that our long-term economic plan is already starting to deliver a better, more prosperous future for the whole of the country, with wages rising, more people finding jobs and more women in work than ever before.

"As the Government for working people, we want to go further and create one nation that is based on security and opportunity. We will continue to help businesses create jobs and support those who want to work hard and get on as part of our ambition to achieve full employment."

Stephen Timms, acting shadow work and pensions secretary, said: " The fall in overall unemployment is welcome, but with more than 740,000 young people unemployed it's clear the Government needs to do far more to give young people the chance to earn a living.

"Ministers are failing to ensure young people get the best start in life. Last year the number of under 25-year-olds starting an apprenticeship fell. It's time for ministers to give young people the world-class apprenticeships and training they need to succeed in life."

TUC general secretary Frances O'Grady said: " Although today's improvements are welcome, there is still a long way to go for youth unemployment and under-employment. Real wage growth remains too reliant on low inflation, and even if prices remain exceptionally low we are facing a lost decade on pay growth.

"The weaknesses in the labour market that remain behind the headlines should not be swept under the carpet. The Government must set clear goals this parliament to bring down youth unemployment and under-employment, and ensure that everyone who needs work has access to a secure and fairly paid job."

James Sproule, chief economist at the Institute of Directors, said: "With real wages growing and unemployment continuing to fall, today's figures indicate the UK economy is well along the road of recovery. Falling energy prices and low inflation have eased the pressure on companies and boosted their balance sheets. Many are now able to pass these benefits on to their staff through pay rises and bonuses."

Neil Carberry, the CBI's director for employment, said: "These figures provide more evidence that the wage squeeze has eased, with private sector pay increasing almost as fast as it was before the crisis. At the same time, firms are creating more jobs.

"If we are to deliver sustainable higher wage growth, we need to see a rise in productivity. That means businesses investing in skills, and the Government helping firms innovate by supporting investment in next month's Budget.

"These figures are testament to the strength of our flexible labour market, which has helped British firms create a strong number of permanent full-time jobs."

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