Britain is Working More Hours, But Are We Adding More Value?
Economic update May 2018: High employment and rising wages, but the productivity gap is still a problem.
Great news! Unemployment has fallen to its lowest figure since records began in the 1970s.
There are now 32.3 million people working in the UK. That’s almost 77% of those of working age, and there’s more good news in the figures this week showing that for the first time in a long time, wages have increased more than inflation.
Since the 2008 financial crash, there’s been a ten-year wage squeeze, with prices rising faster than pay. “Britain needs a payrise” say campaigners, and these new figures might suggest it’s coming soon.
“It’s good to see rising wages alongside strong jobs growth. The challenge now is to embed wage increases through sustained productivity growth, helping to improve living standards right across the UK.”
The productivity gap is a problem that’s puzzled economists, business leaders and government for many years now. It seems that Britain is working more without earning more. This is a problem for employers who are spending more on pay, but not seeing more revenue as a result.
The Financial Times warns that productivity remains a big issue for the economy.
“Declining productivity should be “a wake-up call” for the UK, business leaders warned after new data showed it dropped sharply during the first three months of 2018. Productivity growth has been the missing piece of the UK recovery since the 2008 financial crisis and is thought to be the best guarantor of long-term improvements in living standards.”
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