…but wage growth lags further behind pace of price inflation
FALLING unemployment and a rise in the number of jobs announced yesterday both failed to boost the value of wages, which grew 0.7 per cent in the quarter compared to a year ago, excluding bonuses.
The figure from the Office of National Statistics (ONS), which excludes those who are self-employed, is just 0.3 per cent when bonuses are included and remains far short of the 1.5 per cent rate of inflation.
The comparison between the two rates represents the difference between what people are paid and what they spend buying goods and services. The gap is getting wider, not falling as the government had hoped it would. Labour’s Ed Miliband has been calling on the Prime Minister to act on what he has dubbed the cost of living crisis.
Deputy chief economist at the ONS Peter Patterson said: “While the employment rate has never been higher, the average weekly earnings of employees excluding bonuses have risen by only 0.7 per cent over the past year.”
There may be good news on the horizon, however. A new report out today from the Institute of Directors reveals that two thirds of company directors plan to increase wages at least in line with inflation in the next 12 months.
Twenty-nine per cent of those asked said they would boost pay above inflation.