Unemployment rate falls to lowest since 1975
The Office for National Statistics (ONS) has reported that the unemployment rate fell to 4.7% – it has not been lower than that since the summer of 1975.
Wages are rising above the rate of inflation, which is currently 1.8%, but the gap has narrowed.
Scott Bowman, UK economist at Capital Economics expects that a shortage of workers will push up pay in the coming months: “The latest UK labour market data suggest that average earnings growth is not picking up alongside inflation, resulting in a squeeze on real wage growth.”
Following last week’s Budget, Paul Johnson, director of the Institute for Fiscal Studies (IFS) warned that wages were unlikely to be higher in the next five years.
He said: “On current forecasts average earnings will be no higher in 2022 than they were in 2007. Fifteen years without a pay rise. This is completely unprecedented.”
The ONS also released data on the number of people on zero hour contracts in their main job, which rose by 101,000 between October and December to 905,000. This is equal to 2.8% of all people in employment.