The latest data on unemployment rate in the UK show a fall in the official rate to 6.6% in the three months through April, down from the 6.8% recorded in the first quarter, and the lowest level in more than five years. That sounds good but at the same time, average weekly earnings rose just 0.7%, including bonuses, significantly lower than the pace of inflation. So the real income for the average British worker is still falling, as it has done since the Great Recession began in 2008, or for over six years. And for the last four years, the trend in pay rises has been down, not up.
UK pay and prices (yoy %)
The reason is clear: people in relatively better paid jobs in finance and in the public sector have lost their jobs and those getting jobs since have mainly done so in much lower paid sectors like retail, tourism etc. And we also know that there has been a very large increase in ‘zero hours contracts’, casual labour and self-employment (15% of the workforce now) where incomes are generally lower than paid employment.
The other bad piece of economic news for the prospects of the capitalist economy was global. The World Bank substantially reduced its forecast for global real GDP growth this year from 3.2% to just 2.8%. If that turns out right, for the fourth year running, the world economy will have expanded at less than 3% a year and the world economy is growing way below the trend rate before the Great Recession. Aside from the financial-crisis bounce-back in 2010, it will be the sixth sub-3% rate in the past seven years.