THE UK unemployment rate has fallen to 3.6% in the three months to July – the lowest since 1974 – however, the employment rate and number of vacancies also fell, with pay rises failing to keep up with the rising cost of living.
While the value of regular pay has fallen by 2.8%, inflation remains at a 40 year high of 10.1%, with the latest figure due out tomorrow (Wed 14th September) expected to be higher still.
Kevin Brown, savings specialist at Scottish Friendly, has commented on the latest figures:
“On the face of it, the UK labour market is in good shape with unemployment falling to a 48-year low of 3.6% and the number of payrolled employees rising by 2.8% year-on-year in August.”
“But that doesn’t tell the whole story as nearly 22% of UK adults aged 16 to 64 are economically inactive and not part of the labour force, higher than before the coronavirus pandemic.”
“Meanwhile, workers are facing the biggest wage squeeze for more than 20 years when comparable records began. Adjusted for inflation, growth in real pay fell by -2.8% in the three months to July, which is just shy of the record -3% drop reported last month.”
“Only by factoring in inflation do we get a true sense of how workers’ incomes are holding up as living costs continue to rise. In the private sector, wage growth is faring better but there is a considerable gap to the public sector, where earnings are under greater threat from rising inflation.”
“The hope is that the government’s energy plan will help to fix costs and start to bring inflation under control. That will ease the pressure on workers’ pay packets and allow them a little more breathing space each month.”
“Once in this position households should be able to resume their usual savings habits and start thinking about the best ways to build their long-term financial security.”