Jobs boom continues but slump in real wages bites

 
Ben Southwood
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EMPLOYMENT soared to another new all-time record in the final three months of 2012, despite the economic activity rate falling to a 22-year low.

Employment rose 154,000 between the third and fourth quarter of 2012, reaching 29.73m, the highest level ever. At the same time, unemployment edged down 14,000, to 2.50m, 156,000 lower than during the fourth quarter of 2011.

Total weekly hours worked climbed 0.2 per cent over the quarter and 2.6 per cent over the year to reach 947.1m. And economic inactivity collapsed to its lowest rate since 1991 – 22.3 per cent – with 294,000 more looking for work than a year earlier.

“Yet another set of robust figures for the labour market, with a chunky increase in employment and a sharp fall in the claimant count,” said Item economist Nida Ali.

“There is also pleasing evidence of underlying strength, with the rise in employment almost entirely due to increasing numbers of full-time employees,” Ali added.

The one potentially glum note was the starkly below-inflation increase in wages.

Average earnings growth was just 1.4 per cent over the year to December, only just over half the headline inflation rate of 2.7 per cent.

But economists have brought out these flexible real wages as one of the main reasons so many UK workers are getting jobs despite the dire overall economic picture in the country and across the world.