Wage rate slows again as unemployment rises – what it means for YOUR wallet
MONEY TALKS Wage rate slows again as unemployment rises – what it means for YOUR wallet
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AVERAGE earnings across the country have slowed once again in a fresh hit to workers.
Employees' average weekly earnings, excluding bonuses, grew by 5.2% between February to April this year, according to new figures from the Office for National Statistics (ONS).
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The annual growth in total earnings including bonuses was 5.3%.
When adjusted for inflation, annual growth was 2.1% for regular pay and 2.3% for total pay.
Last month, figures revealed wage growth was at 5.6% excluding bonuses.
Meanwhile the unemployment rate has also risen slightly.
It was estimated at 4.6% for February to April this year for people aged 16 to 64 - slightly above last quarter's rate of 4.5%.
This is also above estimates of a year ago.
However the rate of economic inactivity for the same age group was slightly down at 21.3%, versus 21.4% last quarter.
Liz McKeown, director of economic statistics at the ONS, said: "There continues to be weakening in the labour market, with the number of people on payroll falling notably.
"Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.
"Our survey of businesses shows a stronger picture for Workforce Jobs, but this covers an earlier period, includes people with multiple jobs and can lag our other sources of labour market information.
"Earnings growth has slowed in both cash and real terms, though it remains strong by historic standards. Public sector pay is now growing at a higher rate than wages in the private sector."
What it means for your money
Generally, lower wages are a negative for the economy - especially if they are lower than the rate of inflation.
For reference, the current rate of inflation is 3.5%.
It means households have less purchasing power and less money will go back into the economy.
Experts have blamed changes announced by Chancellor Rachel Reeves in the Budget last October for the fall in wage growth.
In the Budget the Chancellor announced that the rate of employer National Insurance contributions would rise from 13.8% to 15% on April 6.
At the same time, the National Minimum Wage rose, piling further pressure onto businesses already struggling with rising costs.
Meanwhile, it is not yet known what the impact of US President Donald Trump's tariff policies will have on businesses.
In addition, many people may not feel that their wages are going as far in real terms as they are dragged into paying more tax.
Tax thresholds are frozen until 2028, which means as workers' wages rise they are pulled into higher tax bands due to a concept known as fiscal drag.
This means that although their wage has increased, the amount of take-home pay they have has fallen.
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