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Pay packets bulge before Christmas

Wage inflation hits three-year high as UK jobless rate rises

Money - own picWage growth is now standing at 3.2% for the three months to September – or 3% including bonuses – its highest for three years.

However, UK unemployment rose by 21,000 in the three months to September to 1.38 million, according Office for National Statistics data. The unemployment rate rose to 4.1% from 4%.

The unemployment rate in Scotland fell to 3.8% over the quarter and the year to the joint lowest level on record.

Laura Suter, personal finance analyst at investment platform AJ Bell, said: “Households are now seeing their wages rise by considerably more than inflation, which stands at 2.4%.

“When inflation is taken into account the increase in wages is the highest since the three months to December 2016.

“The past few years have seen British workers pummelled by a combination of higher inflation and very sluggish wage growth, meaning they have often faced a real terms wage cut.

“However, the current low [UK] unemployment, which stands at 4.1%, appears to have shifted the odds back into workers’ favour, and we’re starting to see wages rise more meaningfully.

“Retailers on the high street will be hoping this boost to households will mean people loosen the purse strings this Christmas. While we might see some spending, it’s unlikely that we’re going to see a rush to splurge this spare cash.

“The reality for many is that any increase in take-home pay is likely to be funnelled into paying down the large sums of debt many households have taken on in the past few years, including the rising sums on credit cards.”

Scotland outperforming the UK

Commenting on the Scottish figures, Scottish Minister for Business, Fair Work and Skills, Jamie Hepburn said: “Scotland’s unemployment rate has fallen to the joint lowest level on record.  It fell to 3.8% over the quarter and the year, again lower than the UK rate of 4.1% – where unemployment has risen over the quarter.

“Although overall employment fell very slightly over the quarter and the year, on employment for women and young people, we continue to outperform the UK with an employment rate of 71.2% for women, higher than the UK rate of 71.0%, and an employment rate for young people of 59.1%, higher than the UK rate of 55.7%. Compared to the UK we also have lower rates of unemployment for both women and young people.

“Whilst the situation in Dundee with Michelin remains a concern, the Scottish Government will leave no stone unturned in our efforts to find a viable and sustainable future for the plant and its highly skilled workforce.

“We will also continue to urge the UK Government to commit to remaining in the EU single market and customs union to protect jobs and investment in Scotland, if remaining in the EU is not an option.”

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