Unit labour costs 5.3% down on year: Lower pay deals show results
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE KEY measure of British industry's cost competitiveness is improving at its fastest rate on record, outstripping the performance of Japan, Germany and the US.
The amount spent on wages and salaries to produce each unit of manufacturing output in May was 5.3 per cent lower than a year earlier, according to the Department of Employment. This is the biggest one-year fall since records began in 1970.
The fall reflects a combination of low pay settlements, falling factory employment and an accelerating recovery in manufacturing output.
Companies have been stepping up production by lengthening the working week and offering more overtime rather than by employing more workers. Overtime was at a 10-month high in May while the working week was its longest for a year.
Unit labour costs fell 3 per cent in Britain in the year to the first quarter of 1993. They fell by 1 per cent in the US and rose by 7 per cent in Japan and 9 per cent in Germany.
Average earnings growth slowed to a 26-year low in May, pulled down in part by the 1.5 per cent public sector pay ceiling. May's figures included the 1.5 per cent increase for 166,000 civil service clerical workers, down from 4.75 per cent last year.
Average earnings grew by an underlying 3.75 per cent in the year to May, the lowest rise since 1967. The slowdown was concentrated in services, where growth fell by a quarter point to 3 per cent. Earnings growth in manufacturing has been stuck at 5 per cent for four months, with low settlements offset by the upturn in overtime and the working week.
Earnings growth has lagged behind the fall in pay settlements - which now average a little over 2 per cent - because the figures encompass a year's settlements, not just the most recent. They include overtime and bonuses.
Nick Parsons, of Canadian Imperial Bank of Commerce, said wages were still being held down by people's fear of losing their jobs. 'But, with higher overtime earnings and some relief from the recession-induced belt-tightening, the long fall in average earnings growth may be coming to an end,' he added.
Productivity - the amount of output produced by each factory worker - is increasing at its fastest rate since the beginning of 1980. Output per head was 10.5 per cent higher in May than a year earlier. Annual productivity growth throughout the economy was running at 4 per cent in the first three months of the year.
Hamish McRae, page 25
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments