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Unemployment Figures Show More Brits In Work, But Pay Squeeze Continues

You're More Likely To Be In Work, But Your Pay Is Still Not Rising...
Asa Bennett
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MANCHESTER, ENGLAND - JUNE 23: British Prime Minister David Cameron (L) and British Chancellor George Osborne tour building works at Manchester's Victoria Railway Station which is being upgraded on June 23, 2014 in Manchester, England. Chancellor George Osborne earlier spoke of a proposed HS3 high-speed rail link between Manchester and Leeds that would help build a 'northern global powerhouse' linking cities across the North of England. (Photo by Christopher Furlong - WPA Pool /Getty Images)
Christopher Furlong via Getty Images

David Cameron has welcomed official figures showing that the number of unemployed Britons has fallen below two million for the first time since 2008.

However, the prime minister seemed to overlook other figures out today that revealed inflation is still growing faster than wages, meaning that Britons' pay packets are still shrinking in real terms.

Writing on Twitter, Cameron said the Office for National Statistics' latest unemployment data, revealing that the unemployment rate fell to 6%, showed that the coalition's plan was "working".

The number of people out of work fell by 154,000 in the quarter to August to 1.97 million, while the number of people claiming jobseeker's allowance last month fell by 18,600 to 951,900. These figures will be a well-timed political boost as Cameron prepares to face Ed Miliband at prime minister's questions today.

However, experts pointed out that the good news was undermined by the continued evidence that the pay squeeze was not over. The ONS said that wages grew by just 0.7%, which is still outpaced by the Consumer Prices Index (CPI) measure of inflation, which soared by 1.2%.

See also:

Here's Why You're Actually Earning Less (Despite What Your Pay Slip Says)

Warren Ruhomon, a senior market analyst at the Finspreads website, told the Huffington Post UK: "Earnings growth remains some way off inflation, at 0.7%, which continues to hamper consumer spending power."

"In effect, the average price increase of goods and services is more than the averages wages each person takes home, meaning real earnings growth gets squeezed. Both of these factors remain a significant area of concern."

Others pointed out that wage growth was, at least, rising gradually. Jeremy Cook, chief economist at the foreign exchange company, World First, said wage growth was going in the "right direction".

He added: "Real wage increases - while far off at the moment - represent a silver bullet for the global recovery."

10 Facts George Osborne Wants You To Ignore Now The Great Depression Nears An End
Are we really better off than we were six years ago? (01 of10)
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The ONS says that GDP per capita, which gives a sense of individual wealth, was still 5.1% below its pre-crisis peak by the end of 2012. (credit:Christopher Furlong via Getty Images)
We're better off... due to drugs and prostitutes(02 of10)
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The ONS has now factored in spending on drugs and prostitutes into its calculations, estimating that it is worth 0.5% of GDP."The vast majority of illegal drugs that households consume are assumed to be imported from overseas," it adds. Labour have seized on this, with shadow chief secretary Chris Leslie saying “these accounting changes to the way GDP is measured do not mean families or businesses are better off." (credit:Jan Sochor/CON via Getty Images)
This is still the slowest recovery on record(03 of10)
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The ONS still say that the recovery has been the slowest since its records begam, with chief economist Joe Grice describing it as "unusually slow". Meanwhile, the National Institute for Economic and Social Research suggest that it has been the slowest recovery in 100 years. (credit:NIESR )
And the deepest recession on record(04 of10)
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ONS chief economist Joe Grice said: "It remains the case that the UK experienced the deepest recession since ONS records began in 1948" (credit:ASSOCIATED PRESS)
We're still not very productive (05 of10)
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The ONS states: "The headline story of weak productivity remains, and the latest GDP growth revisions do not offer a solution to the ‘productivity conundrum’." Economic productivity was still 2.5% below its pre-crisis peak in the last quarter of 2012, the statistics body said.
Your pay will not have fallen this far since Disraeli(06 of10)
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Britons' wages will by next May never have shrunk so far over the course of a single term of parliament in real terms since the Victorian era, according to research by the House of Commons Library. The last time average earnings, accounting for inflation, slid by a greater amount was from 1874-1880, when Benjamin Disraeli was prime minister. (credit:Dominic Lipinski/PA Wire)
Your pay won't be back to normal for years either(07 of10)
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Inflation is still eating at your pay packet, which means you're getting poorer in real terms, and it will take a while before it not just starts to improve, but returns to pre-recession levels. Your pay packet is still continuing to fall by more than in any prior recovery and is down 8% since May 2010, experts warn.
Osborne will still struggle to get Britain exporting (08 of10)
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The ONS warned: "The contribution of net trade is unchanged and remains weak."Despite Osborne warning in his Budget that he wants businesses to export more, the Office for Budget Responsibility, the government's forecaster, predicts that the UK's exports will still fail to make a net contribution to the country's growth. It said: "Net trade is expected to make little contribution to growth over the remainder of the forecast period, reflecting the weakness of export market growth and a gradual decline in export market share."
How's that deficit reduction going? (09 of10)
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George Osborne's hopes of eliminating Britain's deficit by 2018 look to be increasingly hard as the decline in the country's rate of borrowing appears to have stalled.
Osborne took a while to have any effect(10 of10)
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Osborne's early actions as chancellor are not viewed much more positively, with the ONS saying: "The early part of the recovery path is broadly unchanged, but stronger growth now prevails through 2011 and 2012." (credit:Oli Scarff via Getty Images)
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