What's going on?

Unemployment in the UK was expected to decline slightly in December but data released on Wednesday showed that it remained steady at 5.1%. Earnings growth (e.g. how much people make) grew 1.9% – the lowest level since almost a year ago.

What does this mean?

The paltry earnings growth is probably somewhat of a problem. It reflects the fact that there likely remains a significant number of people who are �underemployed,� i.e. they would prefer to be working more than they are and are thus prepared to accept a low wage when the opportunity for more hours comes along. Moreover, the fact the unemployment rate didn�t decline is possibly a reflection of a somewhat slowing economy � but it�s worth remembering that it remains amongst the lowest unemployment rates in Europe.

Why should I care?

The bigger picture: Worker productivity has declined (supposedly). That means that the economic output per worker has gone down. That�s not good news for wages because companies have to then employ more people to get the same output and they don�t want their personnel costs to rise a lot, so average earnings decline.

For you personally: Pressure on pay probably isn�t good news for you. Historically, earnings have risen about 4% per year in the UK � so for the annualized figure to be less than 2% is disappointing. Nevertheless, this is still above the level of inflation (a.k.a. the rate at which prices are rising), so real incomes are improving. So it�s kind of a mixed bag, really.