Pay Growth Slows As Firms Pay Fewer Bonuses

Official figures show pay growth has been hit by fewer bonus payments though the number of people in employment has reached a new record high.

The wage figures for January were keenly awaited ahead of today's Budget as debate on living standards continues to rage ahead of May's General Election.

While the employment statistics provided more cheer for the Chancellor George Osborne on jobs, they also showed the recent recovery in wage growth had stalled with average earnings rising just 1.8% in the three months to January.

Annual growth of 2.1% was measured in the final quarter of 2014.

The Office for National Statistics (ONS) cited weaker bonus payments and said that when the effects of bonuses were removed, annual earnings growth rose by 1.6% in November to January, slightly down on the previous month's reading.

Despite the slowdown, inflation was measured at 0.3% in January meaning that wages are still rising at a faster pace than prices helped by weaker oil costs and the effects of a supermarket price war.

The jobless rate remained unchanged at 5.7%, the ONS said, though it measured a fall of just over 100,000 people in the unemployment total.

The figure of 1.86 million was the lowest total since the summer of 2008 and almost half a million down on a year ago.

The number of people claiming jobseeker's allowance fell by 31,000 to 791,200 in February - the 28th consecutive monthly reduction.

Employment increased by 143,000 in the latest quarter to January to almost 30.1 million, the highest since records began in 1971.

Prime Minister David Cameron said: "The highest employment rate in our history is not a dry fact. It means more people with the security of a pay packet and a brighter future".

The Business Secretary Vince Cable added: "Today's employment figures are a historic moment.

"With almost three-quarters of working-age people now in work, we have achieved the highest rate of employment in the UK since records began.

"This is a sign that the long-term decisions the Liberal Democrats have taken in government have created a more resilient economy".

Labour's shadow work and pensions secretary Rachel Reeves said: "Today’s fall in overall unemployment is welcome, but working people are still £1,600 a year worse off since 2010, showing the Tory plan is failing.

"After five years of David Cameron the number of people paid less than a Living Wage has risen by 44% and nearly half of all the new jobs created have been in low paid sectors.

"It’s five years of Tory failure on low pay".