Nice while it lasted: British wages drop as worries grow over oil and Europe

Posted: January 20, 2016 in economy
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UK article only

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Nice while it lasted


Recent strong growth in Britons’ pay packets proves short-lived

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UNEMPLOYMENT in Britain is just 5.1%, the lowest since 2006. Economists expect that when joblessness falls, wages will rise, because employers have to compete more fiercely for staff. After a long slump brought on by the recession, by mid-2015 wages were growing nicely (see chart). But as unemployment continued to decline, the economists have been left scratching their heads. In November three-month average growth in pay was just 1.9% in real terms year on year, far below levels in the years before the 2008-09 global crisis.

The shaky world economy is partly to blame. The oil-price slump is biting: wages in the oil-and-gas industry, which are about 50% above the average, have fallen by 12% in the past year. Cheaper oil also prompted a flirtation with price deflation in the middle of 2015, making workers less inclined to push for pay rises. In the year to …

via Economic Crisis


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