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Pay rises outstrip 1.6pc inflation

PUBLISHED: 12:31 16 April 2014 | UPDATED: 12:41 16 April 2014

Unemployment. Photo: Danny Lawson/PA Wire

Unemployment. Photo: Danny Lawson/PA Wire

Average pay rises have outstripped CPI inflation for the first time in four years, official figures showed today.

Pay, including bonuses, was 1.7pc higher in the year to February, compared to the latest CPI inflation rate of 1.6pc.

It is the first time since the spring of 2010 that CPI inflation has not exceeded the increase in pay, said the Office for National Statistics.

Pay increased by an average of 2pc in private firms and by 0.9pc in the public sector.

The news comes as millions of health and local government workers gear up for possible strikes in protest at pay increases of 1pc.

Other figures also showed continuing falls in unemployment and numbers claiming jobseeker’s allowance as well as a record 30.3 million people in work.

Unemployment fell by 77,000 in the three months to February to 2.24 million, a jobless rate of 6.9pc, the lowest for five years.

The claimant count fell by 30,400 in March to 1.14 million, the 17th consecutive monthly reduction. Employment has increased by 691,000 over the past year, giving a rate of 72.6pc, the best for six years.

The number of people classed as economically inactive, including those looking after a relative or who have given up looking for work, fell by 86,000 in the latest quarter to 8.8 million.

Self-employment increased by 146,000 to 4.5 million, the highest since records began in 1992. Long-term and youth unemployment have both fallen.

The number out of work for more than a year has been cut by 32,000 to 807,000, while the jobless figure for 16 to 24-year-olds has fallen by 38,000 to 881,000, the lowest for five years.

There are 1.42 million people working part-time because they cannot find full-time work, a fall of 17,000 over the quarter, but 10,000 higher than a year ago.

Average total pay is £479 a week, or £449 excluding bonuses.

Minister for Employment Esther McVey said: “More young people are in work, more women are in work, wages are going up, and more and more businesses are hiring - and it’s a credit to them that Britain is working again.

“But there is still more to do - which is why I’d go even further and call on more employers to work with us to tap into the talent pool the UK offers.”

GMB general secretary Paul Kenny said: “The recovery under way is welcome but we have a very long way to go to climb out of the hole caused by the recession.

“Given the increase in population, GDP per head is still 5.8pc below 2007 levels.This is the root cause of average earnings being down 13.8pc in real terms since then. The pay of the bottom 50pc of the workforce is still being squeezed.”

The Government said unemployment has dropped below 7% for the first time since the recession and employment has seen the biggest annual jump in a generation.

Joe Grice, chief economic adviser at the Office for National Statistics, said: “These figures - rising employment and falling unemployment and inactivity - continue the strong trend in the labour market that has been seen in recent months. Self-employment has again been a prominent growth area.”

First Minister of Wales Carwyn Jones said: “These figures once again show that the Welsh economy is continuing to outperform the rest of the UK.

“Over the past year, Wales has seen the largest increase in the rate of employment and a lower rate of unemployment than the UK average.

“Over the same time, economic inactivity and youth unemployment are falling more in Wales than nearly all other parts of the UK and we have seen a bigger growth in private sector employment in Wales than England, Scotland or Northern Ireland. This clearly shows the impact that our economic policies are having on the Welsh economy.”

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