UK takes the ‘Un’ out of Unemployment
2014 seems to be turning the economy about face and marching it back in the right direction. Unemployment in Britain has dropped faster this year than it has in the last twenty four years. After over ten years of limping along, crippled by unemployment, debt and much of the population living below the poverty line, Britain seems to be bouncing back with unexpected energy.
What is astonishing is that even though unemployment is falling and more and more people are in jobs, salaries remain constant. There has been no rise in wages. Unemployment has fallen 6.4%, the economy grown by 3.5%, but wages trail behind with a mere 0.6% increase. This, even as inflation continues to have it way with prices of goods and services.
In theory, the economic model of supply and demand would dictate that if unemployment decreases, then employers would normally need to increase wages in order to attract workers from a dwindling workforce. The lesser the supply the higher the demand, its elementary! But not the case in England this time, which is keeping The Bank of England on its toes, if not slightly confused.
The big worry is a rise in the interest rate, but The Bank of England has decided to play ball and give the budding economy a sorely needed boost. The Governor of The Bank of England, Marc Carney, had this to say:
“Now is not the time [to raise the interest rate], given the degree of slack, given the weakness of wages and given some of the start of recovery in productivity.”
Experts agree, and forecast, that the interest rate will only be seen to rise at the beginning to middle of next year. There is a general consensus that higher wages must be put on the table before the economy is put under the stress of any increase.
Even with 800 000 new jobs having been generated on the market in the past year, this does not account for the amazing fall in unemployment. It seems the British population has also decided to take responsibility for their own economy as almost 40% of previously unemployed citizens have actually employed themselves and started their own businesses. This has the knock on effect of giving the economy yet another boost.
A young entrepreneur, who lost her job a couple of years ago, now has a thriving little tea shop. She explains that her previous job paid her twice as much as she makes running her own business, but that she loves her freedom, she can pay her bills and wouldn’t give up her new life for the world. A happy citizen generating income and revenue.
Other reasons for the lack of rise in wages could be due to immigrant workers willing to work for less, and workers that carry on working after the age of 65.
This news comes with a huge sigh of relief for a country that has been stuck in the mire of economic collapse for nearly a decade. Proof that there is always a Possible in an Impossible!