UK: Wages affected by inflation despite historically low unemployment rates

British unemployment remains close to its historical low but wages are still plummeting in real terms, official data reflected on the eve of a budget presented on Tuesday. (March 14), as reported by AFP.

In comparison to the three months ending in December, the unemployment rate was steady at 3.7 percent in the three months ending in January, according to a statement from the Office for National Statistics (ONS).

Without bonuses, wages increased by 6.5 percent, but when inflation is factored in, wages fell by 3.5 percent.

“Although the inflation rate has come down a little, it’s still outstripping earnings growth, meaning real pay continues to fall,” said ONS economic statistics director Darren Morgan told AFP. 

Workers in Britain are protesting that their salary has not kept up with inflation as strikes continue to take place.

A cost-of-living crisis that has kick-started strikes throughout Britain was the backdrop for the data’s release, which came one day before finance minister Jeremy Hunt unveiled the government’s most recent budget, as reported by AFP. 

The first day of a three-day salary strike by UK hospital physicians began on Monday. The walkout is part of a weeklong labour action planned to coincide with the budget that will also see teachers, railway workers, and public officials walk out.

The economy currently has more than 1.1 million open positions, the ONS also disclosed on Tuesday. 

“The jobs market remains strong, but inflation remains too high,” Hunt said in reaction to Tuesday’s data.

“Tomorrow at the budget, I will set out how we will go further to bear down on inflation, reduce debt and grow the economy, including by helping more people back into work.”

Hunt implied over the weekend that he might provide expanded childcare assistance to aid parents in returning to the workforce.

In part due to a lack of EU employees after Brexit and a record number of people classified as long-term unwell, the government is trying to fill vacancies.

Although annual UK inflation has decreased recently, it is still higher than 10%, or five times the Bank of England’s goal rate.

(With inputs from agencies)

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