The number of unemployed people living in the UK has been slowly dropping, with the number of people now out of work standing at 1.86 million. This fell by 97,000 in the three months to December. The Office for National Statistics (ONS) has also stated that the employment rate is currently at its joint highest, at 73.2%. It is one of the highest employment rates on record, with records beginning in 1971.
Average earnings, including individual bonuses, are also on the rise, and in the quarter compared to a year earlier, are 2.1% higher. Because of this, the number of people that are seeking jobseeker’s allowance, is continuing to fall, and has experienced its 27th month of a steady decrease.
The rising wages, coupled with a higher level of productivity, is hopefully going to have an impact on Britain’s economic activity. David Cameron has also been encouraging businesses to give their staff a pay rise, due to falling costs associated with running a business.
The Bank of England believes that this strong growth in employment, as well as more confidence amongst newly employed people, will encourage the population to look for new jobs with better salaries. This will hopefully lift the pay growth back up to its average of 4% by 2016.
The fact that this wage growth is happening at a time when inflation is at an all-time low, is a welcome boost for households in the UK, although Mark Carney, the Governor of the Bank of England, has warned that the dip in inflation should be ignored, as any decreases in prices are likely to be relatively short-lived.