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The painful “Brexit squeeze” has intensified its grip on family budgets with real wages falling by 0.5 per cent in the three months to May, official figures revealed today.
However, there was better news on unemployment with the number of jobless falling by 64,000 to 1.49 million, or 4.5 per cent, the lowest rate since 1975. The number of people looking for work has plummeted by 152,000 over the 12 months to the March to May quarter.
But for those in work wages are still failing to keep pace with rising shop prices — fuelled by “imported inflation” after sterling’s post-Referendum slump — leading to falling living standards.
Average regular weekly pay rose two per cent over the year to £473 while pay including bonuses was 1.8 per cent higher at £503.
With inflation running at 2.9 per cent in May this led to regular pay falling by 0.5 per cent and total pay with bonuses dropped by 0.7 per cent in real terms.
The data comes as Theresa May faces growing pressure to lift the one per cent “austerity” pay cap on public sector workers such as teachers and nurses.
Union bosses urged the Government to step in to restore real wage growth. TUC general secretary Frances O’Grady said: “Three months of falling pay is three months too many. The clock is ticking while workers wait for the Government to act.
“Ministers must set out a plan to get real wages rising across the public and the private sectors. They should start by scrapping the unfair pay restrictions on nurses, midwives and other public sector workers. And the minimum wage must be raised to £10 as quickly as possible.”
Howard Archer, chief economic advisor to forecaster the EY ITEM Club, said: “Worryingly for consumers, higher employment is still not translating into higher pay as inflation ratchets up.
The squeeze on consumers continues to intensify, with obvious negative implications for personal expenditure.
“Anaemic earnings growth is a key factor arguing against any near-term Bank of England interest rate hike, and the latest data keep this argument firmly in place.”
Mariano Mamertino, economist at online job site Indeed, said: “The wage squeeze being endured by millions of Britons has turned into a clear and present danger for the economy.”
The number of people in work rose 175,000 to 32.01 million, an employment rate of 74.9 per cent, the highest since records began in 1971.
ONS senior statistician Matt Hughes said: “Despite the strong jobs picture, there has been another real-terms fall in total earnings.”
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