Unemployment in the UK rises to 7.8% as ‘real’ wages have gone down for nearly 5 years in a row

For all the cheer leading in the press this morning you’d be forgiven for thinking that the unemployment rate in the UK went down today. The truth of the matter is that the previous month the rate was 7.7% and the latest figure is 7.8%.

A quick look at the chart and we can see that after shooting up during the financial crisis unemployment in the UK really hasn’t budged. 

(click for sharper image) 

But it is the the amount people are earning (or not as the case may be) that really caught our eye in the most recent labour report from the government funded ONS:

  • Total pay (including bonuses) rose by 1.4% compared with October to December 2011. Regular pay (excluding bonuses) rose by 1.3% compared with October to December 2011.

So with the CPI running at 2.7% people in the UK once again saw their ‘real’ wages drop dramatically. In fact there is a very worrying divergence between the two metrics now developing:

(click for sharper image) 

So for nearly 5 years in a row price inflation has been running higher than wage growth. This means that people’s income has effectively been dropping for 5 years without a break.

And to see how acute the problem really is today look at the years 2000-2007, for each of those years wages were outstripping the reported price inflation rate by on average 3% – those days are now well and truly over.

This metric is way more important than any given unemployment rate.

Essentially the actions by the BoE have been making people poorer year-in year-out since they started the money printing, and they wonder why there is still a recession on in the UK.

And what’s worse is that according to today’s minutes published by the BoE the problem is about to get much worse as the BoE decide that they’re going to print more money.



Link to this article: : http://www.goldmadesimplenews.com/analysis/unemployment-in-the-uk-rises-to-7-8-as-real-wages-have-go-down-for-nearly-5-years-in-a-row-9951/

Posted by on Feb 20 2013. Filed under Analysis. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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