‘Fragile’ economy

Any hopes of an economic boost were dashed today (November 13) as new figures revealed an unexpected rise in unemployment, while earnings barely rose against a backdrop of languishing productivity.

Figures from the Office of National Statistics (ONS) showed unemployment rose by 21,000 to 4.1 per cent or 1.38m in the period from July to September, mostly driven by the rising number of men out of work.

Today’s jobs report also shows the scale of the crisis in retail – while 132,000 jobs were created between June 2017 and June 2018, the number of workers in wholesaling, retailing and motor vehicle repairing fell by 73,000, which accounted for the largest drop in the sector since 2010.

Average real weekly earnings, adjusted for inflation, crept up by less than 1 per cent in the year to September – an increase whose significance was diminished by the fact that earnings were higher in 2015, and that a now record number of vacancies hasn’t translated into significant wage growth.

Forecasts from the Office for Budget Responsibility (OBR) published in October have estimated that real wages won’t return to 2008 levels until at least 2024. This 16-year wage slump UK workers will have suffered will be the longest in 200 years.

Productivity, a key indicator of economic health measured by output per hour worked, fell by 0.4 per cent between July and September, even though total hours worked over the same time period increased by 1 per cent.

A new study to be published this week surveying thousands of business will show the devastating ‘Brexit effect’ on the UK’s productivity, which has lagged significantly behind other major world economies since 2008.

Researchers from Stanford and Nottingham universities have linked UK business’ attitudes toward Brexit uncertainty and their sales and employment figures. They discovered that Brexit uncertainty has caused Britain’s productivity growth to halve.

Commenting on today’s latest labour market figures, TUC general secretary Frances O’Grady highlighted that pay was “rising at a snail’s pace” and said that “boosting pay packets must be a priority”.

“That means the government putting the minimum wage up to £10 as quickly as possible,” she said. “And it means giving unions the freedom to enter every workplace and negotiate fair pay rises.

Unite general secretary Len McCluskey agreed.

“These figures confirm our economy is fragile,” he said. “Let’s hear no crowing from ministers when joblessness has risen — pay is only just keeping pace with the cost of living and real wage growth remains low. It’s clear we cannot trust this government with our future.”

Labour’s shadow work and pensions secretary Margaret Greenwood said that today’s figures have hidden the reality that “more working families are living in poverty and more people are stuck in insecure jobs”.

She vowed that the next Labour government will ban zero-hour contracts, end the public sector pay squeeze and introduce a Real Living Wage of at least ÂŁ10 an hour by 2020.