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Unemployment falls but many workers not paid National Minimum Wage

Authored by Phil Meekin

Phil Meekin

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Approximate read time: 4 minutes

Recent figures from the ONS show that unemployment in the UK has fallen by 57,000 in the three months to June; this has brought the jobless total down to 4.4%, the lowest level of unemployment in the UK since 1975.

Currently 75.1% of people are in work, the highest level since 1971, and this has partly been put down to the introduction of the later state pension age for women across the UK. Just over 32 million people were in work in the three months to June which is an increase of 338,000 on the same period last year.

Although, more people are in work, the squeeze on real incomes is continuing to grow for households across the country. The average weekly earnings grew by 2.1% in July 2017 compared with the previous year which is slightly higher than the 2% increase in June.

Despite this, inflation was measured at 2.9% in August meaning that real earnings actually fell by 0.8% which has seen households cutting back on unnecessary spending over the past few months. Matt Hughes, senior labour market statistician for National Statistics, commented on the latest figures; “The employment picture remains strong, with a new record high employment rate and another fall in the unemployment rate. Despite the strong jobs picture, however, real earnings continue to decline,”

More bad news for the job market showed another decline as productivity fell by 0.1% in the second quarter compared with the previous three months. This is worrying as more people are in jobs so you would expect productivity to be on the rise and the fall may point to the number of lower paid and temporary/zero hours contracts that are being offered on the job market currently.

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Low wages are still an issue for many as back in August the government updated the latest ‘name and shame’ list of employers who were not paying their staff the National Minimum Wage, or the National Living Wage for those over 25. A record £2m is set to be refunded to workers whose bosses failed to pay the National Minimum Wage.

The current National Living Wage for those over 25 is £7.50 per hour and for those aged 21 to 24, the National Minimum Wage is £7.05.

The latest list shows that 230 employers have not followed the law and met the recent rise in the National Minimum Wage as they should have. As a result, 13,000 employees have received, or are due to receive, compensation for the pay they have lost out on.

Of the businesses who were included on the list, Argos was one of the biggest names and they were fined £800,000 for failing to pay 37,000 members of their staff an average of £64 each. Argos employees had been required to attend briefings before shifts started and security checks when their shifts ended, this extra time unpaid was one of the issues the government was not happy with.

Chief executive of Argos, John Rogers, commented on the fine to say; “I am pleased to say the issue was resolved quickly, and processes have been updated to ensure this cannot happen again,”

Other sectors and businesses included prominently on the list include businesses in the hospitality sector, hairdressers, fish and chip shops and beauty treatment businesses. In October 2016, the ONS said the number of those whose pay was below the National Minimum Wage was 362,000 but this included workers whose pay was legally below that level.

As a result, the government states that they are succeeding on cracking down on pay but the TUC said it is a problem still to be solved as hundreds of thousands of workers are thought to be missing out on their legal pay entitlement.

TUC general secretary, Frances O’Grady, said; “We know there are more wage-dodging employers out there…TUC research suggests there are at least a quarter of a million workers being cheated out of the minimum wage.”

So as unemployment and productivity falls, many workers in traditionally low paid sectors are struggling to obtain their legal pay entitlement and as inflation rises, businesses and consumers are likely to find it difficult to invest and provide for their family as their money does not go as far as it once did. If inflation falls and wages rise then productivity for businesses across the UK would be likely to go up and reach much higher levels.

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