Unemployment nudges up to 3.8% and real wages fall 3% in a year

UK unemployment edged higher in the three months to the end of February according to new data as the British economy continues to be impacted by high inflation. The UK unemployment rate is now 3.8% of the labour force although this is still 0.2 percentage points below pre-pandemic levels.

We also saw new data on the growth in average pay measured in nominal terms but a decline in real earnings during 2022.

Average weekly earnings including overtime and bonuses were £638 in February 2023, showing a steady increase over time (except for early in the coronavirus pandemic). But whilst pay has been rising in nominal terms, it has not kept pace with rising prices. Real wages fell by an estimated 3% in the UK in 2022. This is an important statistic to have as application evidence for an exam - there has been and continues to be a significant squeeze on real living standards in the UK.