Dare I say it - UK Showing Early Signs of Failed Recovery

There had been some good news for once in the UK today about the road to financial recovery and according to Mervyn King we may well be back on the right road. But what they failed to cite was that there are also early signs of a jobs without growth economy.

The Office for national statistics today confirmed that the UK now has more people in Employment than in any other time in the past 40 years. To compliment this the number of people claiming job seekers benafits has dropped by 12,100 people to 1.56m claimants. The Unemployment rate fell over all to 7.7% too. But what this data fails to show is an unprecedented squeeze on workers’ pay with labour productivity and living standards falling.

Unprecedented pay squeeze signals 'jobs without growth' economy

However, economists warned that ordinary Britons are paying the price for record employment with below-inflation wage growth and a squeeze on living standards. More people are in work but for effectively less money, when inflation is taken into account, experts said.

Average earnings increased by 1.5pc in the year to November, down by 0.3pc on the previous month, the Office for National Statistics said. The Retail Prices Index measure of inflation - traditionally used to calculate wages - reached 3.1pc in December.

John Philpott, director of The Jobs Economist, a consultancy, said: “The UK employment and unemployment figures may continue to beat expectations but what’s really astounding is the unprecedentedly long squeeze on pay packets. This is continuing to sustain a ‘jobs without growth’ economy but at the price of falling labour productivity and reduced living standards.

“However, while such a pay squeeze made obvious sense when preserving jobs at the depth of the recession in 2008 and 2009, it is no substitute for a proper economic recovery that creates jobs, cuts unemployment and makes people in work better-off.”

David Tinsley, economist at BNP Paribas, said earnings growth was “benign”, adding “it remains a puzzle that an economy showing basically flat growth is generating a rise in total hours worked.”

Other figures showed a “worrying” jump in redundancies toward the end of 2012, suggesting the labour market crisis will continue into 2013, Mr Philpott said.

Lloyds on Wednesday became the latest bank to announce a further 940 job cuts this year. Earlier in the day Flybe, the no-frills carrier said it planned to axe 300 jobs and yesterday unions said Rolls-Royce was to shed around 400 roles.

So the early signs are certainly starting to show, that the UK is not over the worst and is now failing to recover. Although I am not even remotely sceptical about the timings of the release of this information.

reply to post by surrealist


How can the UK recover when it is directly competing with Chinese workers getting paid 1/4 of the wages working in factories with the same capital investment as the West?

All we will see is a averaging out of wages on a global basis. It is currently happening. Living standards are reducing in the West and rising in the East.

The only people who benefit are the super rich.

The only force that can stop it is nationalism which would force a rolling back of free trade and globalization. That won't happen easily as the super rich control the media and the politicians.

Meanwhile, most people in the UK are glued to their TV wondering who will be the next winner of X-Factor.