Back to work: Real pay starts rising again after six years of pain

THE SQUEEZE in real pay-packets that has hit workers over most of the last six years is coming to an end, with earnings finally rising faster than prices.

Average total pay rose by 1.7 per cent in the December to February period compared to a year earlier – higher than the latest rate of inflation, which was a 1.6 per cent annual rise in the consumer price index (CPI) last month.

Pay has not exceeded CPI for four years, since it briefly spiked in 2010. For most of the last six years it has lagged inflation, resulting in a climbing cost of living that Labour has sought to exploit.

Despite falling unemployment and rising real wages, shadow work and pensions secretary Rachel Reeves insisted yesterday that there remains “a huge amount of lost ground to catch up”.

“It is deeply complacent and out of touch for the Tories to try and claim this deep-seated cost-of-living crisis has suddenly been solved,” Reeves said.

Yet news of tumbling joblessness – which fell to 6.9 per cent in the three months to February – was welcomed by the coalition government.

“These figures are some of the strongest evidence yet that we are embedding the recovery,” said Liberal Democrat chief secretary to the Treasury Danny Alexander.

“We have record numbers in work and unemployment falling at the fastest rate in over a decade.”

Unemployment has dropped by 320,000 in the last recorded 12-month period, falling by 77,000 in December to February compared to the previous three months. The number of people claiming jobseeker’s allowance fell by another 30,400 between February and March, a drop of 386,100 compared to March 2013.

However, with 1.14m people still claiming, the dole queue remains significantly longer than its pre-recession low of 778,400.

The number of people in work in the UK climbed to 30.39m in the

December to February period, up by 691,000 on a year earlier.

Total pay rose 1.7 per cent during the same period, yet excluding bonuses it rose at a more modest pace of 1.4 per cent. Total private sector pay rose by two per cent.

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