When wages briefly drew level with inflation earlier this year, some claimed that the “cost-of-living-crisis” (in Labour’s phrase) was over. The Tories argued that wages were a “lagging indicator” and that higher output would translate into higher salaries. As George Osborne remarked after the publication of the GDP figures in October 2013, “If Britain is growing then the finances of Britain’s families will start to grow.”
But today’s earnings figures show that they haven’t. Regular pay rose by just 0.7 per cent in the three months to May, well below inflation of 1.5 per cent and the slowest rate since ONS records began in 2001. Total pay, including bonuses, increased by a still worse 0.3 per cent.
The economic upside is the jobs boom. Unemployment fell by 121,000 to 2.12m (6.5 per cent), the lowest level since the final quarter of 2008, while employment rose by a remarkable 254,000 to 30.64m, equalling the record high of 73.1 per cent achieved in February 2005.
But as Ed Miliband has long warned, far too many are in trapped in low-wage, low-skill jobs that don’t pay them enough to achieve an adequate standard of living. Changing this is the defining economic challenge of our time. In the meantime, Miliband has been gifted a potent attack line for today’s PMQs, the final session before the summer recess.