And getting back to pre-recession wages is going to take an awfully long time
Today’s employment figures show that the overall picture hasn’t changed a great deal:
- Employment is still rising, with another record employment level. The employment rate of 73.2 per cent was briefly equalled in 2005, but has not been surpassed since these records began in 1971.
- Unemployment fell again, with the rate and level falling to their lowest since 2008.
- There are a record number of vacancies, and the number of unemployed people per vacancy – 2.6 – is now roughly where it was before the recession.
Until 2013, the highest women’s employment rate was 67.1 per cent, which had been achieved a few times. Women’s employment rate has been over that for a year and currently stands at 68.5 per cent. Men’s unemployment rate has fallen 1.6 percentage points in the past year; if it falls 1.1 it will reach its lowest ever.
Once again, young people are the furthest from benefiting from this recovery. There were 740,000 unemployed 16 – 24 year olds in October – December, up slightly from 737,000 in July – September. Long-term youth unemployment has fallen significantly in the last year, but we have a way to go before we get back to pre-recession levels and the picture is somewhat worse the longer the period of unemployment we consider:
Long-term 16 – 24 unemployment (000s), Oct – Dec quarters
|6 months plus||12 months plus||24 months plus|
Although earnings are finally rising in real terms, there is a huge gap to make up. December was the first month since 2009 in which average weekly earnings (including bonuses) rose at a faster annual rate than the Retail Price Index, which is the measure of inflation usually used for pay negotiations. This means that, in our real pay chart, real pay increases – the green columns – are finally positive:
Average weekly earnings, RPI inflation and real pay increases
So pay didn’t go down in real terms (hurrah!) but the increase was only about 0.5 per cent. Just getting back to the real wages we had before the recession will take an awfully long time at this rate – at the TUC we’ve projected forwards real earnings at the current monthly rate of growth (using the CPI measure of inflation, which is less favourable to our case) and we calculate that it will still take until the end of the next Parliament to achieve this.
And returning to the pre-recession real value of wages would not be a mark of success. Before the recession, real wages grew at an annual rate of 1 to 1.5 per cent, depending on where you start and finish your measurements. If we had maintained that rate of growth, average weekly earnings would be £80 to £100 higher than the current figure of £489.
Richard Exell is senior policy officer at the TUC. Follow him on Twitter
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