Employment

Household income has ground to a halt despite a rise in employment

Workers' wallets have been hit by inflation and benefit freezes

Large amount of UK bank notes in a brown envelope

Just weeks ago the Office for National Statistics announced that UK employment was at its highest in nearly 50 years.

More than 130,000 women had benefited from a jobs boom, reports suggested, with older people also finding more work opportunities.

But now figures released by the Department for Work and Pensions (DWP) suggest this has made no difference to household income at all.

Despite five years of recovery from post-recession dips, the median income has stalled (after adjusting for inflation) – for only the fourth time in 30 years – and stopped progress made to reduce absolute poverty in its tracks.

The Institute for Fiscal Studies said this pointed to the effects of higher inflation after the Brexit referendum caused the pound to crash, as well as working age benefits freezes.

Pascale Bourquin, a research economist at IFS, said the figures are “eroding the real value of employees’ earnings and – in particular – working age benefits, which were frozen in cash terms.

“This was the first year of zero income growth since 2012–13, and leaves average incomes only 6 per cent above their pre-recession levels.”

Analysts also said that while the inequality gap did not officially widen, the OBR‘s most recent report found that very high earners have seen their pay grow the fastest.

As income growth has stalled so too have living standards, with no improvement for those living in poorer households. The amount of people living in absolute poverty (defined as having income below 60 per cent of the 2010-2011 median) stayed at 19 per cent of the population.

Campbell Robb, Joseph Rowntree Foundation chief executive, said: “Until today, the government has been hiding behind absolute poverty, but even that defence is starting to weaken.

“Families are looking to the government to immediately address problems of low pay, high rents and a weakened social security system.”

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