Joblessness rising and wages stagnating

First unemployment increase since mid-2015 raises concerns about labour market slowdown

Unemployment has risen for the first time since mid-2015, according to the Office for National Statistics (ONS). An additional 21,000 people are out of work, bringing the total to 1.7 million, although the headline unemployment rate has remained steady at 5.1 per cent. Employment growth has also slowed.

Nick Palmer of the ONS commented:

‘It’s too soon to be certain, but with unemployment up for the first time since mid-2015 – and employment seeing its slowest rise since that period – it’s possible that recent improvements in the labour market may be easing off.’

Average wage growth has remained flat at 2.2 per cent, demonstrating that despite low inflation real income is stagnant. Average weekly earnings are still considerably below crisis rates pre-crisis rates. The TUC argues that, to address this issue, ‘ministers need to play an active role and invest in skills, infrastructure and public services to create better jobs and a more balanced economy.’

average weekly earnings

Shadow work and pensions secretary, Owen Smith, commented:

“This growth in unemployment is worrying, as over 20,000 more people are now looking for work. This comes on top of sluggish earnings growth, as working people make their way through a Tory decade of record low pay. At this time the very last thing the Tories should be doing is cutting in-work support to low and middle paid workers.  Yet that is exactly what Stephen Crabb did last week by introducing Universal Credit cuts that will leave 2 million working families an average of £1,600 a year worse off.”

Scottish unemployment has risen by 20,000 since December, climbing to a headline rate of 6.1 per cent. Employment has also fallen to 73.9 per cent, below the UK average of 74.1 per cent.

In contrast, the rate of unemployment in Wales has fallen below that of the UK for the first time in two years, to five per cent.

Today’s figures may suggest that the EU referendum is having a negative effect on employment rates. ‘There are big question marks hanging over the British economy, because of questions about our status in the EU,’ commented work and pensions secretary, Stephen Crabb.

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