UK’s wage growth heads to 2-year low in 2016

On Wednesday, UK’s Office for National Statistics (ONS) posted the data for the country’s labour market from October to December 2016.

Britain experienced a slow growth under the wages sector during the last month of 2016 as part of the continuing effect of June’s Brexit. UK’s unemployment rate also slows down for the fourth straight quarter remaining at 4.8%.

Meanwhile, analysts initially expected a wage growth reaching around 2.8%, but ONS posted a growth only by 2.6%, also down by 0.2% from the previous month. UK weak wage growth can be attributed to the rising inflation in the nation ever since the government was trying to salvage the nation’s declining economy after the Brexit last June.

The rise inflation rates further put pressure under common household and necessity products, pushing wage growth to be withheld from increasing.

With the continuously increasing inflation rate in the UK now at 1.8%, analysts believe that there is a big possibility for many families to go into poverty due to rising consumer prices.

The declining value of the British pound, inflation rates are likely to reach to at least 3% within the year

According to Labour Force Survey, between the periods July to September 2016 and October to December 2016, the employment rate in the UK increased, but unemployment rate barely moved.

In the October to December period, ONS reported a total of 31.84 million people employed, which was 37,000 more than the July to September months and 301,000 higher than a year ago.

For the last quarter of 2016, UK reported a total of 23.29 million individuals employed full time, which was 218,000 more from a year ago, while part-time workers came in at 8.55 million, 84,000 more than a year earlier. With this data, Britain saw 74.6% growth in their employment rate, which was the highest record compared to past records.

“Continued moderate growth in employment has led to a new high in the total employment rate, while the rate for women has reached 70% for the first time on record. Overall, the labour market appears to be edging towards full capacity,” said ONS senior statistician David Freeman.

Despite the promising growth in the country’s employment rate, the unemployment rate posts slow growth and barely changed for the most recent update, dragging the nation’s labour market performance. At 4.8%, 8.86 million were economically active, which was 31,000 fewer from the July to September period, and 61,000 from a year ago, sending the labour market to its 11-year low as well.

“The unemployment rate is now at its lowest in over a decade but wage growth remains subdued by historical standards, raising questions about the degree of spare capacity in the UK’s labour market.

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