UK labor costs grow by more than 2% again

Flower pickers harvest daffodils on a farm near Holbeach in eastern England, on February 25, 2019. (AFP)
Updated 05 July 2019

UK labor costs grow by more than 2% again

  • British employers have been on a hiring spree recently, pushing up pay for workers at the quickest pace in a decade
  • Many economists have linked the jobs boom to uncertainty about Brexit

LONDON: Growth in British unit labor costs, an early signal of inflation pressures ahead, slowed to 2.1 percent in the first three months of 2019 but it was the sixth quarter in a row when costs grew by more than 2 percent in annual terms.
British employers have been on a hiring spree recently, pushing up pay for workers at the quickest pace in a decade, one of the few bright spots for the economy ahead of its departure from the European Union.
Many economists have linked the jobs boom to uncertainty about Brexit which has made employers favor hiring workers — who can be laid off quickly — over longer-term commitments to investing in equipment.
The Office for National Statistics said the 2.1 percent increase in labor costs in the January-March period was weaker than a rise of 3.1 percent in the fourth quarter of last year.
The ONS also confirmed preliminary data showing a weak picture for productivity in early 2019.
Britain’s poor productivity record poses a risk to the country’s long-term growth prospects.
Output per hour fell by an annual 0.2 percent in the January-March period for its third straight fall, the longest such run since 2013 when Britain was struggling to emerge from the hangover of the global financial crisis.
“Our latest figures represent a continuation of the UK’s productivity puzzle,” said Katherine Kent, head of productivity at the ONS. “This sustained stagnation in productivity in the last decade is at odds with what we’ve seen after previous economic downturns.”


Oman’s sultan says government will work to reduce debt

Updated 23 February 2020

Oman’s sultan says government will work to reduce debt

DUBAI: Oman's Sultan Haitham bin Tariq al-Said said on Sunday the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.
Haitham, in his second public speech since assuming power in January, said the government would create a national framework to tackle unemployment while addressing strained public finances.
"We will direct our financial resources in the best way that will guarantee reducing debt and increasing revenues," he said in the televised speech.
"We will also direct all government departments to adopt efficient governance that leads to a balanced, diversified and sustainable economy."
Rated junk by all three major credit rating agencies, Oman's debt to GDP ratio spiked to nearly 60% last year from around 15% in 2015, and could reach 70% by 2022, according to S&P Global Ratings.
The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices. Also, the late Sultan Qaboos, who ruled Oman for nearly 50 years, held back on austerity measures.
The country has delayed introducing a 5% value added tax from 2019 to 2021, and economic diversification has been slow, with oil and gas accounting for over 70% of government revenues.
Last week, rating agency Fitch said Oman was budgeting for a higher deficit of 8.7% for 2020 despite its expectation of further asset-sale proceeds and some spending cuts.
"We are willing to take the necessary measures to restructure the state's administrative system and its legislation," Haitham said in his first speech since the mourning period for Qaboos ended, without elaborating.
He said there would be a full review of government companies to improve their business performance and competence.
Oman observers have said that if Haitham moves to decentralise power it would signal willingness to improve decision making. Like Qaboos, he holds the positions of finance minister and central bank chairman as well as premier, defence and foreign minister.