While Ian Duncan Smith’s plans to get Britain working again are far from popular, it appears they may have been effective. There has been a record decline in the number of people going back to work, with youth unemployment figures looking particularly promising. However, while less people are in receipt of Job Seeker’s Allowance (JSA), it does appear that the overall average wage has fallen. There are several explanations available for this.
In the second quarter of 2014, unemployment rates fell by 6.4%. This has been the biggest drop since 2009, which seems to suggest that JSA reforms are having a positive effect. Overall, the number of UK workers gaining employment rose by around 502,000. At the same time, the number of non-UK workers finding employment in the UK rose by 326,000 – accounting for around 40% of the improved unemployment statistics.
Overall in June, the number of people claiming JSA in the UK dropped by 32,000. This brings current figures to around 1.1 million, and if progress continues that number could drop below 1 million for the first time since 2009.
While more people are back to work, it appears that wages are rising at a slower rate than inflation. Average wages excluding bonuses rose by 0.6%, which has been the slowest rise on record since 2011. In addition, wages including bonuses fell by around 0.2%.
This is giving financial experts cause for concern, as it means that everyday people may not be able to keep up with the rising cost of rent, fuel, and energy. However, these same experts have proposed a number of reasons for this happening:
According to David Kern, the chief economist at the British Chambers of Commerce, all of this is a good sign that the UK is on the right track as far as economic recoveries go, but that the economy is still quite fragile. The Bank of England has suggested that average salaries may now rise by about 1.25% before the end of 2014, which is half its original estimate of 2.5%.
Business experts are now focusing on attracting more international companies to the UK. While some have forged their presence here, the majority is in London, which leaves the rest of the country behind. There has also been talk of a need to innovate more, by bringing newer technologies to the UK.