Working too well

28 Jun 2004 By Edward Hadas

But policymakers shouldn t react by thinking this is another reason interest rates need to rise. Higher wages are mainly the sign of a healthy labour market. To make it still healthier, the policy response should be to improve skills.

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The UK unemployment rate is 4.9%, according to internationally comparable statistics. The UK rate was 10% in 1994 and 6% in 2000. The unemployment rate is higher than 8% in France, Germany, Italy and Spain.

The labour participation rate is 5% higher in the UK than in the major European economies.

UK wage increased at an annual rate of 4.7% in April, up from 4.3% in March. The increase was caused by higher bonuses.

Compared to France, Germany or the US, the UK workingage population has comparable levels of completion of primary education, but substantially lower completion of secondary and tertiary education.

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