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| UK unemployment rate hits 42-year low but real wages shrink – business live | UK unemployment rate hits 42-year low but real wages shrink – business live |
| (35 minutes later) | |
| 11.36am BST | |
| 11:36 | |
| If Britain’s jobless rate is really at a 40-odd year low, why doesn’t it feel like a nation at full employment? | |
| Our economics editor Larry Elliott has highlighted three reasons: | |
| One reason for the weakness of earnings growth is the ferocious squeeze on public sector pay, which – stripped of bonus payments – is rising at just 1.3% a year. | |
| A second factor is that employers are able to buy in cheap labour from overseas. Migration from other EU countries has not fallen off a cliff despite the result of last summer’s referendum: according to the Office for National Statistics, the number of non-UK nationals from the EU working in the UK rose by 171,000 to 2.32 million between the first quarter of 2016 and the first quarter of 2017. This continues a trend, which has seen the number of workers from the other 27 EU countries double since the recession of 2008-09. | |
| Finally, the nature of work seems to have changed. Work by David Blanchflower, Rui Costa and Stephen Machin has shown that earnings growth for the self-employed – who account for 15% of the workforce – has been particularly weak in recent years. People are working flat out in the gig economy but still struggling to make ends meet. The labour market has, for want of a better word, been Uberised. | |
| 11.13am BST | |
| 11:13 | |
| Labour: Families suffering falling living standards | |
| Here’s John McDonnell, Labour’s Shadow Chancellor, on today’s labour market report: | |
| “These figures bring home the Tories’ total failure to improve the living standards of working families. | |
| “Real wages are lower than they were in 2010 and, after seven years of the Tories, they are now falling again. | |
| “The choice at this election couldn’t be clearer: either a Tory party presiding over a crisis in living standards or a Labour government that will build a Britain for the many, not the few.” | |
| Updated | |
| at 11.19am BST | |
| 11.11am BST | |
| 11:11 | |
| New productivity figures have also been released this morning, and they’re a shocker. | |
| Productivity across the UK economy shrank by 0.5% in the first three months of 2017, the first fall since the end of 2015. | |
| It’s because the UK economy took on more workers, who worked longer hours, but didn’t deliver a corresponding rise in economic output. | |
| Britain: really depress yourself this morning - look at the dreadful productivity figures pic.twitter.com/cojHEh5YT5 | |
| 10.46am BST | 10.46am BST |
| 10:46 | 10:46 |
| The decline fall in real wages is particularly painful for workers, because pay packets hadn’t clawed back all the losses since the financial crisis. | The decline fall in real wages is particularly painful for workers, because pay packets hadn’t clawed back all the losses since the financial crisis. |
| 10.40am BST | 10.40am BST |
| 10:40 | 10:40 |
| Lib Dems: Brexit vote is hurting workers | Lib Dems: Brexit vote is hurting workers |
| The Liberal Democrats are blaming the Brexit vote for the slump in real wages. | The Liberal Democrats are blaming the Brexit vote for the slump in real wages. |
| Sir Vince Cable, the former business secretary, says workers are paying the price for the plunge in sterling last June. | Sir Vince Cable, the former business secretary, says workers are paying the price for the plunge in sterling last June. |
| “This squeeze on living standards is almost certainly caused by the falling pound since the Brexit vote. | “This squeeze on living standards is almost certainly caused by the falling pound since the Brexit vote. |
| “If Theresa May is allowed to pursue her extreme Brexit agenda, we can expect further weakening of the economy and erosion of people’s living standards. | “If Theresa May is allowed to pursue her extreme Brexit agenda, we can expect further weakening of the economy and erosion of people’s living standards. |
| “People don’t have to settle for a bad Brexit deal that will cost jobs and push up prices. A brighter future is possible. | “People don’t have to settle for a bad Brexit deal that will cost jobs and push up prices. A brighter future is possible. |
| “The Liberal Democrats will give you the final say on the deal, with a chance to reject it and stay in the EU.” | “The Liberal Democrats will give you the final say on the deal, with a chance to reject it and stay in the EU.” |
| 10.22am BST | 10.22am BST |
| 10:22 | 10:22 |
| Britain’s wage squeeze threatens to undermine the economic recovery, warns Suren Thiru, head of economics at the British Chambers of Commerce. | Britain’s wage squeeze threatens to undermine the economic recovery, warns Suren Thiru, head of economics at the British Chambers of Commerce. |
| If the disparity between pay and price growth continues to increase as we predict, household spending is likely to slow further, weakening overall economic activity. | If the disparity between pay and price growth continues to increase as we predict, household spending is likely to slow further, weakening overall economic activity. |
| “The next government must do more to close the skills gap, including improving the transition from education to work by guaranteeing universal experience of work in all schools for under 16s, and delivering a future immigration regime based on economic need, rather than an arbitrary migration target. This will help firms compete on the global stage, boosting UK productivity and growth.” | “The next government must do more to close the skills gap, including improving the transition from education to work by guaranteeing universal experience of work in all schools for under 16s, and delivering a future immigration regime based on economic need, rather than an arbitrary migration target. This will help firms compete on the global stage, boosting UK productivity and growth.” |
| 10.13am BST | 10.13am BST |
| 10:13 | 10:13 |
| Dutch bank ING says that Britain enjoyed an “astonishing” jump in employment last month. | Dutch bank ING says that Britain enjoyed an “astonishing” jump in employment last month. |
| The real standout in today’s UK jobs report was the surge in employment growth. The three month on three month average came in well above consensus at 122k, lifted by a huge 340k “single month” increase in jobs – the highest in 2 years. | The real standout in today’s UK jobs report was the surge in employment growth. The three month on three month average came in well above consensus at 122k, lifted by a huge 340k “single month” increase in jobs – the highest in 2 years. |
| This is hard to square given recent survey data, which suggests the outlook for hiring is more muted. | This is hard to square given recent survey data, which suggests the outlook for hiring is more muted. |
| But they’re concerned by the fall in real wages, which is likely to prevent an interest rate hike before 2019. | But they’re concerned by the fall in real wages, which is likely to prevent an interest rate hike before 2019. |
| It’s also hard to ignore the fact that wages are now growing at a noticeably slower pace than prices. The key measure of wage growth, which excludes bonuses, came in at 2.1%. When taken together with yesterday’s acceleration in inflation to 2.7%, real wages are now falling. We’ve already seen measures of consumer activity slow through the first quarter. | It’s also hard to ignore the fact that wages are now growing at a noticeably slower pace than prices. The key measure of wage growth, which excludes bonuses, came in at 2.1%. When taken together with yesterday’s acceleration in inflation to 2.7%, real wages are now falling. We’ve already seen measures of consumer activity slow through the first quarter. |
| ING: "Astonishing rise in UK employment won't mask fall in real wages. This already appears to be dampening consumption." No hike before '19 | ING: "Astonishing rise in UK employment won't mask fall in real wages. This already appears to be dampening consumption." No hike before '19 |
| 10.10am BST | 10.10am BST |
| 10:10 | 10:10 |
| Resolution: UK faces worse pay squeeze since Waterloo | Resolution: UK faces worse pay squeeze since Waterloo |
| The slump in real wages last quarter means Britain is facing its worst decade for pay since the Napoleonic Wars, says the Resolution Foundation. | The slump in real wages last quarter means Britain is facing its worst decade for pay since the Napoleonic Wars, says the Resolution Foundation. |
| It fears the situation will get worse this year. Stephen Clarke, their economic analyst, explains: | It fears the situation will get worse this year. Stephen Clarke, their economic analyst, explains: |
| “Britain kicked off the year with another welcome record on employment, and another big fall in unemployment. This welcome jobs boost will provide a much needed boost to family incomes. | “Britain kicked off the year with another welcome record on employment, and another big fall in unemployment. This welcome jobs boost will provide a much needed boost to family incomes. |
| “However, the good news on jobs is not feeding through to positive news on pay growth, which turned negative at the start of the year and looks set to remain below inflation throughout most of 2017. | “However, the good news on jobs is not feeding through to positive news on pay growth, which turned negative at the start of the year and looks set to remain below inflation throughout most of 2017. |
| “Coming so soon after the big post-crisis pay squeeze, this new phase of falling pay means that this decade is set to be the worst in over 200 years for pay packets.” | “Coming so soon after the big post-crisis pay squeeze, this new phase of falling pay means that this decade is set to be the worst in over 200 years for pay packets.” |
| 10.06am BST | 10.06am BST |
| 10:06 | 10:06 |
| Updated | Updated |
| at 10.14am BST | at 10.14am BST |
| 10.00am BST | 10.00am BST |
| 10:00 | 10:00 |
| Here’s Professor Geraint Johnes, Director of Research at the Work Foundation, on today’s jobs figures: | Here’s Professor Geraint Johnes, Director of Research at the Work Foundation, on today’s jobs figures: |
| “The latest employment figures indicate remarkably strong performance, with unemployment falling by 53000 over the first quarter of the year to a rate of 4.6%. Indeed, unemployment has fallen in every region except London and the South East. This has been primarily due to a large increase in the number of full-time employees in employment (some 196000 across the UK). The number of part-time employees has meanwhile fallen (by 61000). There has been little change in the number of self-employed workers over the quarter. | “The latest employment figures indicate remarkably strong performance, with unemployment falling by 53000 over the first quarter of the year to a rate of 4.6%. Indeed, unemployment has fallen in every region except London and the South East. This has been primarily due to a large increase in the number of full-time employees in employment (some 196000 across the UK). The number of part-time employees has meanwhile fallen (by 61000). There has been little change in the number of self-employed workers over the quarter. |
| “On pay, the data are less encouraging. In the first quarter of the year, the year-on-year growth in total pay amounted to 2.4%. This is below the current rate of price inflation and indicates a renewed squeeze in real pay. The pay data indicate a collapse in wage settlements in the construction industry, and this is significant because much of the employment growth in the last part of 2016 came from that sector. While welcoming the strong employment growth evidenced in the first quarter’s figures, sustaining this into the longer term may therefore prove challenging.” | “On pay, the data are less encouraging. In the first quarter of the year, the year-on-year growth in total pay amounted to 2.4%. This is below the current rate of price inflation and indicates a renewed squeeze in real pay. The pay data indicate a collapse in wage settlements in the construction industry, and this is significant because much of the employment growth in the last part of 2016 came from that sector. While welcoming the strong employment growth evidenced in the first quarter’s figures, sustaining this into the longer term may therefore prove challenging.” |
| 9.59am BST | 9.59am BST |
| 09:59 | 09:59 |
| Unemployment: the key charts | Unemployment: the key charts |
| Duncan Weldon of the Resolution Group says some of the charts in today’s labour market report are “astonishing”. | Duncan Weldon of the Resolution Group says some of the charts in today’s labour market report are “astonishing”. |
| 1. The employment rate just keeps getting higher. pic.twitter.com/aqjYSvDRuM | 1. The employment rate just keeps getting higher. pic.twitter.com/aqjYSvDRuM |
| 2. There's been a huge shift away from public sector employment. pic.twitter.com/6rZmv0aZ0u | 2. There's been a huge shift away from public sector employment. pic.twitter.com/6rZmv0aZ0u |
| 3. The picture for real wages is just grim. pic.twitter.com/2B5kZJO59D | 3. The picture for real wages is just grim. pic.twitter.com/2B5kZJO59D |
| 9.50am BST | 9.50am BST |
| 09:50 | 09:50 |
| Britain is still creating jobs. It just isn’t paying people enough to protect them from the rising cost of living. | Britain is still creating jobs. It just isn’t paying people enough to protect them from the rising cost of living. |
| Today’s labour market report shows that the number of people in work in the UK increased by 122,000 in the 3 months to March 2017 to 31.95 million. | Today’s labour market report shows that the number of people in work in the UK increased by 122,000 in the 3 months to March 2017 to 31.95 million. |
| Around 200,000 full-time jobs were created, while the number of part time jobs fell by 78,000. | Around 200,000 full-time jobs were created, while the number of part time jobs fell by 78,000. |
| This drove the employment rate to a new record high of 74.8%. | This drove the employment rate to a new record high of 74.8%. |
| 9.44am BST | 9.44am BST |
| 09:44 | 09:44 |
| This chart shows how the gap between inflation (2.7% in April) and basic pay growth (2.1% in January-March) has widened, driving real wages into the red. | This chart shows how the gap between inflation (2.7% in April) and basic pay growth (2.1% in January-March) has widened, driving real wages into the red. |
| The gap between UK inflation (2.7% and rising) and wage growth (2.1%) is widening. Real wages falling at fastest rate in 3 years. pic.twitter.com/YmNIKe2Q4m | The gap between UK inflation (2.7% and rising) and wage growth (2.1%) is widening. Real wages falling at fastest rate in 3 years. pic.twitter.com/YmNIKe2Q4m |
| Including bonuses, wages rose by 2.4% year-on-year, thanks to “bonuses in the finance and insurance sector”. | Including bonuses, wages rose by 2.4% year-on-year, thanks to “bonuses in the finance and insurance sector”. |
| Updated | Updated |
| at 10.15am BST | at 10.15am BST |
| 9.37am BST | 9.37am BST |
| 09:37 | 09:37 |
| UK jobless rate hits 42-year low, but real wages shrink | UK jobless rate hits 42-year low, but real wages shrink |
| Breaking! Britain’s unemployment rate has hit its lowest level since 1975. | Breaking! Britain’s unemployment rate has hit its lowest level since 1975. |
| The jobless rate fell to 4.6% in the January-March quarter, down from 4.7% a month ago, the Office for National Statistics reports. That’s lower than expected, and implies that the jobs market is holding up in the face of Brexit. | The jobless rate fell to 4.6% in the January-March quarter, down from 4.7% a month ago, the Office for National Statistics reports. That’s lower than expected, and implies that the jobs market is holding up in the face of Brexit. |
| But there’s bad news too. Real wages are shrinking, as workers – particularly in the private sector – suffer from rising inflation. | But there’s bad news too. Real wages are shrinking, as workers – particularly in the private sector – suffer from rising inflation. |
| Excluding bonuses, average weekly earnings increased by 2.1% in the quarter, that’s the weakest growth since the three months to July 2016. | Excluding bonuses, average weekly earnings increased by 2.1% in the quarter, that’s the weakest growth since the three months to July 2016. |
| That means wages are not keeping pace with inflation -- which was 2.3% in February and March, and 2.7% in April. | That means wages are not keeping pace with inflation -- which was 2.3% in February and March, and 2.7% in April. |
| The ONS says: | The ONS says: |
| The recent increase in consumer price inflation including owner occupiers’ housing costs has seen the annual rate of real wage growth (excluding bonuses) turn negative for the first time since the 3 months to September 2014. | The recent increase in consumer price inflation including owner occupiers’ housing costs has seen the annual rate of real wage growth (excluding bonuses) turn negative for the first time since the 3 months to September 2014. |
| The pay squeeze is particularly painful for public sector workers. | The pay squeeze is particularly painful for public sector workers. |
| Private sector regular pay grew by 2.3% in the 3 months to March 2017, while public sector pay grew by 1.3%, compared with the same period a year ago. | Private sector regular pay grew by 2.3% in the 3 months to March 2017, while public sector pay grew by 1.3%, compared with the same period a year ago. |
| More to follow! | More to follow! |
| Updated | Updated |
| at 10.17am BST | at 10.17am BST |