“Economic textbooks suggest the UK's falling unemployment rate will eventually ride to the rescue of the millions of Britons suffering from falling real wages.
“The theory goes that with unemployment now well below what the Bank of England deems the ‘natural’ rate - coupled with the lowest inactivity rate in decades - employers will have to start paying higher wages to attract the staff they need to grow.
“But so far the theory has failed to keep up with reality. With consumer prices now rising at an eyewatering 2.9% a year, most people’s pay packets aren’t even close to keeping up.
“Even with the lifting this week of the public sector pay cap in England and Wales, pay rises for civil servants are likely to stay well below inflation, and it’s a similar story across much of the private sector.
“Of course it’s good news that the economy continues to create jobs, but this latest fall in the number of unemployed people risks being a vanilla irrelevance in a labour market which is stubbornly refusing to play ball with economic theory and causing increasing pain to workers.”
Fall in UK unemployment a "vanilla irrelevance as labour market inflicts increasing wage pain" - reaction from Indeed economist
Mariano Mamertino, EMEA economist at the global job site, Indeed, comments:
