Jim Armitage: The dole queues may be shrinking, but wages are falling in real terms

 

Outlook Another day, another arrow of good news fired into the recession’s retreating posterior.

Yesterday’s figures on unemployment show the misery of worklessness really does appear to be coming under control, with Britain now back at a jobless rate of 6.5 per cent – the lowest since late 2008. Over the past year, the number of unemployed has tumbled by 383,000.

The speed with which the dole queues have shrunk have defied the doom-mongers (myself included) – even taking into account the continued high numbers of those working against their wishes in part-time or self-employed positions. Can it really only have been last August when the Bank of England’s Governor Mark Carney was giving us “forward guidance” that interest rates wouldn’t start rising until unemployment had fallen from the then 7.8 per cent to 7 per cent?

City economists like to sneer “I told you so” on this score. They said at the time  that 7 per cent unemployment was only just around the corner given the accelerating economy, and that Mr Carney’s semaphore guidance flags were all tangled up from the outset. Undignified though such sniggering is, the City scribblers have been proved well and truly right.

But perhaps we should now be asking: for how long?

Much of the rise in employment is based on hiring on building sites and elsewhere in the property industry, which has been enjoying the housing  boom.

As (patchy) evidence begins to emerge that the market may finally be slackening its idiot pace, one wonders whether people will feel less wealthy and, as a result, less prone to spend.

Without that feelgood factor for homeowners of double-digit house price growth, there isn’t a great deal else out there encouraging them to spend. Certainly, if yesterday’s workforce figures are anything to go by, while people may have jobs, their pay has barely moved on a year ago. Indeed, if you factor in the recent rise in inflation, wages are actually falling in real terms – by as much as 1.6 per cent if you take wage rises in the three months to May and June’s inflation level.

Not only that, but within the pay figures, according to the CEBR economics think-tank, big rises in pay in a small number of industries where there are skills shortages could be actually flattering the overall numbers. If you’re not in construction, manufacturing or IT, pay is even less generous than the headlines suggest.

The City boffins hadn’t bargained on this when they were mocking the Bank’s forecasters last year. But they should consider sluggish salaries when urging the Governor to start whacking up interest rates.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat