CHANCELLOR Philip Hammond will be delighted with the news that unemployment for the last quarter fell by 16,000 to 1.42 million. The unemployment rate is now 4.2% – the lowest since May 1975 – and the number of people in work, 32.2 million, is the highest on record.
At the same time comes news that figures for the quarter ending in February 2018 showed that wages rose by 2.8% while inflation – measured by the Consumer Prices Index (CPI) – was only 2.5% in March, down from 2.7% in February. In other words wages, which have been rising by less than inflation since February 2017, have just caught up with price rises.
The Chancellor is especially excited by the wages figures as he is relying on domestic demand to boost the economy. Domestic demand will only increase if wages go up. He’s not the only Minister with a smile on his face. Esther McVey, Work & Pensions Secretary, has welcomed the news on unemployment – and claimed credit, saying, “Day-by-day we are helping people turn their lives around by getting into employment. Jobs are key to transforming lives and work is the best route out of poverty.” She hasn’t mentioned whether the jobs are secure or full-time or above the minimum wage – but the thought’s there.
So it’s all good news for the economy, then? Sadly, no.
Frances O’Grady, TUC General Secretary, had to point out that although some very low wages have gone up, overall workers are still £14 a week worse off than they were ten years ago. When you take factors such as pensions into account (so many employers have cut back on company schemes), workers are losing out even more.
Some business leaders are also urging caution. Suren Thiru of the British Chamber of Commerce welcomed figures which he said were further evidence of economic recovery but also warned that workers were too saddled with debt to increase their levels of spending anytime soon.
A month ago, Chancellor Hammond gave his “Spring Statement” – quite literally “springing” into an optimistic eulogy to the UK economy, in which he compared himself with the bouncy Tigger in the Winnie the Pooh books.
The economy is growing, he said. In fact, it’s growing faster than we’d hoped and the deficit is under control! Hours later 3,000 Toys R Us workers found out they would be losing their jobs in the next three weeks as the company went under – and more jobs losses have been announced each week since. Get a grip, Tigger.