And the overall unemployment rate is still well above pre-slump levels.
Despite the rise in the last quarter, average earnings growth for UK workers remains at very low levels.

The unprecedented decline in real wages seems to be partly associated with long-term changes in welfare benefits policy. Lone parents and older workers – in part associated with increasing pension age for women and the fall in the value of pensions and annuities for those approaching retirement – have been forced to look for work. So the ‘reserve army of labour’ has risen and competition for jobs has been intense. As a result, employers have been able to cut wages, especially in non-union sectors. As a result, the majority are taking the pain through lower real incomes rather than job losses, as price inflation outstrips pay rises.

Unemployment rates may be higher in Europe and the US than in the UK, but a broader stretch of British workers are taking a significant and lengthening hit to their living standards than those workers in northern Europe or Americans.
June 12, 2013, 11:34am

Leading think tank the Institute of Fiscal Studies has released a report showing that the current recession since 2008 is the longest and deepest in over a century.
The UK is experiencing what’s known as a productivity puzzle, whereby a relative recovery in employment and working hours has been accompanied by a fall in output, as measured by GDP.

Source: IFS, ONS data
This has some real consequences for British workers. The IFS shows how real hourly wages across income levels (deflated using the Retail Prices Index) were four per cent lower in April 2011 than they were in April 2008, compared to five per cent higher in the early 1980s and ten per cent higher in the early 1990s.
The IFS finds that wages are positively correlated with productivity, but can’t explain definitely whether there is any causal relationship between the two.

As welfare cuts hit (particularly the elderly and single parents) and the value of household wealth falls, more are pushed back into work. The increasing labour supply has created a greater competition for jobs, and moved workers’ priorities towards stability over than pay. This has pushed wages down and, between 2010 and 2011, 70 per cent of those staying in the same job faced a reduction in real wages.

The decline in trade union membership, meanwhile, has contributed to a more flexible workforce, meaning employers are more able to reduce wages or make job cuts to save on costs. Greater freedom to hire and fire, combined with low pay, the IFS say, may explain the productivity puzzle.
Policymakers are unlikely to be comforted then by the news yesterday that Britain’s manufacturing output fell by 0.2 per cent in April 2013, following encouraging increases of 1.1 per cent in March and 0.7 per cent in February.
However, the wrong thing to do at this point would be to increase welfare spending and employment regulation to take the least productive back out of the workforce and hamper small businesses’ ability to hire through regulation and a higher minimum wage, as the TUC are currently campaigning for. The recovery may be taking longer this time, but the UK could emerge stronger than ever and it’s important we don’t become impatient.
– See more at: http://www.cityam.com/live-blog#sthash.3LRR6IK1.dpuf
Leading think tank the Institute of Fiscal Studies has released a report showing that the current recession since 2008 is the longest and deepest in over a century.
The UK is experiencing what’s known as a productivity puzzle, whereby a relative recovery in employment and working hours has been accompanied by a fall in output, as measured by GDP.

Source: IFS, ONS data
This has some real consequences for British workers. The IFS shows how real hourly wages across income levels (deflated using the Retail Prices Index) were four per cent lower in April 2011 than they were in April 2008, compared to five per cent higher in the early 1980s and ten per cent higher in the early 1990s.
The IFS finds that wages are positively correlated with productivity, but can’t explain definitely whether there is any causal relationship between the two.

As welfare cuts hit (particularly the elderly and single parents) and the value of household wealth falls, more are pushed back into work. The increasing labour supply has created a greater competition for jobs, and moved workers’ priorities towards stability over than pay. This has pushed wages down and, between 2010 and 2011, 70 per cent of those staying in the same job faced a reduction in real wages.

The decline in trade union membership, meanwhile, has contributed to a more flexible workforce, meaning employers are more able to reduce wages or make job cuts to save on costs. Greater freedom to hire and fire, combined with low pay, the IFS say, may explain the productivity puzzle.
Policymakers are unlikely to be comforted then by the news yesterday that Britain’s manufacturing output fell by 0.2 per cent in April 2013, following encouraging increases of 1.1 per cent in March and 0.7 per cent in February.
However, the wrong thing to do at this point would be to increase welfare spending and employment regulation to take the least productive back out of the workforce and hamper small businesses’ ability to hire through regulation and a higher minimum wage, as the TUC are currently campaigning for. The recovery may be taking longer this time, but the UK could emerge stronger than ever and it’s important we don’t become impatient
– See more at: http://www.cityam.com/live-blog#sthash.3LRR6IK1.dpuf
eading think tank the Institute of Fiscal Studies has released a report showing that the current recession since 2008 is the longest and deepest in over a century.
The UK is experiencing what’s known as a productivity puzzle, whereby a relative recovery in employment and working hours has been accompanied by a fall in output, as measured by GDP.

Source: IFS, ONS data
This has some real consequences for British workers. The IFS shows how real hourly wages across income levels (deflated using the Retail Prices Index) were four per cent lower in April 2011 than they were in April 2008, compared to five per cent higher in the early 1980s and ten per cent higher in the early 1990s.
The IFS finds that wages are positively correlated with productivity, but can’t explain definitely whether there is any causal relationship between the two.

As welfare cuts hit (particularly the elderly and single parents) and the value of household wealth falls, more are pushed back into work. The increasing labour supply has created a greater competition for jobs, and moved workers’ priorities towards stability over than pay. This has pushed wages down and, between 2010 and 2011, 70 per cent of those staying in the same job faced a reduction in real wages.

The decline in trade union membership, meanwhile, has contributed to a more flexible workforce, meaning employers are more able to reduce wages or make job cuts to save on costs. Greater freedom to hire and fire, combined with low pay, the IFS say, may explain the productivity puzzle.
Policymakers are unlikely to be comforted then by the news yesterday that Britain’s manufacturing output fell by 0.2 per cent in April 2013, following encouraging increases of 1.1 per cent in March and 0.7 per cent in February.
However, the wrong thing to do at this point would be to increase welfare spending and employment regulation to take the least productive back out of the workforce and hamper small businesses’ ability to hire through regulation and a higher minimum wage, as the TUC are currently campaigning for. The recovery may be taking longer this time, but the UK could emerge stronger than ever and it’s important we don’t become impatient.
– See more at: http://www.cityam.com/live-blog#sthash.Uwpv0ACG.dpuf
It would be interesting if you made a similar article on the Indian economy on it’s current trend. Especially I’d like to know your take on the ‘sliding rupee’, the ‘slowdown’ and the ‘record current account deficit’ . In re Britain, the mega takeovers of the Tata over CORUS and Jaguar have made big news, but what is your take on these on the larger scheme of things ? India has become the 2nd largest foreign investor in the UK as a result of these takeovers. Would be eagerly waiting for your reply
Reblogueó esto en Alejandro Valle Baeza.
Lowering real wages is a way of increasing the rate of profit. This can be done in a variety of ways including lowering the value of money through QE of one sort or another and also flooding the labour market with as yet, unsold labour power.
“But a change might also take place in an opposite direction. By virtue of the increased productivity of labour, the same amount of the average daily necessaries might sink from three to two shillings, or only four hours out of the working day, instead of six, be wanted to reproduce an equivalent for the value of the daily necessaries. The working man would now be able to buy with two shillings as many necessaries as he did before with three shillings. Indeed, the value of labour would have sunk, but diminished value would command the same amount of commodities as before. Then profits would rise from three to four shillings, and the rate of profit from 100 to 200 percent. Although the labourer’s absolute standard of life would have remained the same, his relative wages, and therewith his relative social position, as compared with that of the capitalist, would have been lowered. If the working man should resist that reduction of relative wages, he would only try to get some share in the increased productive powers of his own labour, and to maintain his former relative position in the social scale. Thus, after the abolition of the Corn Laws, and in flagrant violation of the most solemn pledges given during the anti-corn law agitation, the English factory lords generally reduced wages ten per cent. The resistance of the workmen was at first baffled, but, consequent upon circumstances I cannot now enter upon, the ten per cent lost were afterwards regained.” Marx ‘Value, Price and Profit’
Reblogueó esto en Alejandro Valle Baeza.