Pace of UK wage growth still high

Wage growth for UK employees remains high in the latest data, despite a rise in unemployment.

Between January and March 2024, regular pay (excluding bonuses) grew by 6% compared with the same period last year, the Office for National Statistics (ONS) said. Total pay (including bonuses) was up 5.7%.

Economists had expected pay growth to slow down, but both measures were unchanged from the previous monthly report.

Meanwhile, the unemployment rate was estimated at 4.3% — up on the quarter and on the year, and above pre-pandemic rates.

The data also showed a further drop in the estimated number of job vacancies, down 26,000 on the quarter to 898,000 in February to April 2024. This was the 22nd consecutive month of declining vacancies, although the number remains above pre-pandemic levels.

“We continue to see tentative signs that the jobs market is cooling,” said Liz McKeown, director of economic statistics at the ONS.

With unemployment increasing, the number of unemployed people per vacancy has continued to rise, approaching levels seen before COVID-19, McKeown noted.

“Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years.”

The earnings data will be taken into account by policy makers at the Bank of England who will decide if and when interest rates should be cut.

UK wage growth still ahead of price rises

Pay rises for UK workers remain well above inflation, which could factor into the Bank of England’s decision on when to cut interest rates.

Regular pay, excluding bonuses, increased by an average of 6% in the three months to February 2024 compared with a year earlier, according to the latest data from the Office for National Statistics (ONS). This is down slightly from 6.1% in the three months to January.

Taking inflation into account, pay growth was 1.9% — the highest level since July to September 2021.

As high earnings risk boosting demand, and therefore prices, policy makers would prefer to see a significant easing in the pace of wage growth before reducing interest rates from the current level of 5.25%.

ONS director of economic statistics Liz McKeown said there are “tentative signs that the jobs market is beginning to cool”.

The data showed a drop in the employment rate and an increase in the unemployment rate between December and February, and there was a further rise in the number of people classed as economically inactive — those not in work or looking for a job.

Vacancy numbers also continued to come down, declining by 13,000 on the quarter to 916,000. This was the 21st consecutive period of job vacancies decreasing, but the total was still 120,000 above the pre-pandemic level.

UK wages up 1.8% in real terms

Pay growth for UK employees has slowed again but is still outpacing inflation, new figures show.

In October to December 2023, annual growth in employees’ average regular earnings (excluding bonuses) was 6.2%. Including bonuses, earnings grew by 5.8%, the Office for National Statistics (ONS) said.

The increase in wages is smaller than in previous periods but remains above the rate of overall price rises, increasing households’ spending power.

When the figures are adjusted for inflation, regular pay rose on the year by 1.8% and total pay was up 1.4%.

Elsewhere, the monthly data showed a drop in the unemployment rate to 3.8% in the last three months of 2023, and growing employment.

But the figures also reveal that there are historically high numbers of people reporting they are long-term sick and unable to work.

The estimated number of job vacancies fell by 26,000 on the quarter to 932,000.

“Job vacancies fell again, for the 19th consecutive month,” said ONS director of economic statistics Liz McKeown. “However, there are signs this trend may now be slowing.”

Vacancies remain above pre-pandemic levels.

Wages still growing faster than price rises

Pay growth in the UK has slowed again, but remains above the rate of inflation, official figures show.

Regular earnings (excluding bonuses) in the three months to November 2023 rose by 6.6% year-on-year, compared with 7.3% a month earlier, the Office for National Statistics (ONS) said.

Including bonuses, pay grew by 6.5%.

“While annual pay growth remains high in cash terms, we continue to see signs that wage pressures might be easing overall,” said Liz McKeown, ONS director of economic statistics. “However, with inflation still falling more quickly, earnings continued to grow in real terms.”

UK inflation currently stands at 3.9%, a more than two-year low.

The data also showed a fall in the number of job vacancies for a record 18th consecutive period.

The estimated number of vacancies in October to December 2023 was 934,000, a decrease of 49,000 from the previous three months and down by 226,000 from a year ago. However, vacancies are still above levels seen before the pandemic.

Unemployment was largely unchanged at 4.2%.

UK pay growth eases but remains above inflation

Pay growth for UK employees is slowing down but remains higher than inflation, new figures show.

In the three months to October wages grew by 7.3% excluding bonuses, or 7.2% including bonuses — slightly down on recent periods, the Office for National Statistics (ONS) said.

With inflation falling to 4.6% in October it meant that in real terms wages were growing at the fastest pace since September 2021.

Public sector workers saw average basic earnings growth of 6.9% in August to October, which is among the highest annual growth rates since comparable records began in 2001. In the private sector, earnings growth was 7.3%.

“While annual growth in earnings remains high in cash terms, there are some signs that wage pressure might be easing overall,” said Darren Morgan, ONS director of economic statistics. “However, as inflation has been falling more quickly, pay continues to grow in real terms.”

The ONS data also revealed that the number of job vacancies fell in September to November to 949,000, down 45,000 on the previous three-month period.

Vacancies have now been declining for the longest period on record, although the number of vacancies remains “well above” the pre-pandemic level, Morgan noted.

Elsewhere, the data showed a largely unchanged picture, with the proportions of people who are employed, unemployed or neither working nor looking for a job all little changed compared with the previous quarter.

Wages up 1% in real terms

Pay growth has eased but remains ahead of inflation, according to new official figures.

Regular pay (excluding bonuses) rose by 7.7% year-on-year in the July to September, slightly down on earlier periods. The increase was higher than average inflation over the same three months, the Office for National Statistics (ONS) said.

Taking inflation into account, wages rose by 1% — the largest increase since the three months to September 2021.

Elsewhere, the monthly data showed that the number of job vacancies fell for the 16th month in row, although the total remains 156,000 higher than before the pandemic.

The UK’s unemployment rate was largely unchanged at 4.2%, despite the economy stalling.

“Our labour market figures show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter,” said Darren Morgan, ONS director of economic statistics.

“The number of job vacancies fell for the 16th straight month. Nevertheless, vacancies still remain well above their pre-pandemic levels.

“With inflation easing in the latest quarter, real pay is now growing at its fastest rate for two years.”

There were 229,000 working days lost because of labour disputes in September, with the majority of the strikes in the health and social work and education sectors.

Wage growth slows down

Growth in UK workers’ regular pay has fallen back slightly, according to the latest figures from the Office for National Statistics (ONS).

Regular pay (excluding bonuses) rose by 7.8% in the three months to August 2023 compared to a year earlier. This is down from an upwardly revised 7.9% in the three months to July.

Taking inflation into account, the real-terms increase in pay was much smaller. Consumer price inflation stood at 6.7% in August.

Employees’ average total pay (including bonuses) was up 8.1% in June to August, including the impact of one-off payments made by the NHS and civil service.

The monthly pay data is being closely watched by the Bank of England as it weighs up whether to resume raising interest rates to help bring down inflation. Any increase in household spending power could boost demand and put upward pressure on prices.

Elsewhere, the data showed a drop in job vacancies, in a further sign that the labour market is losing momentum.

In the three months to September 2023 there were 988,000 vacancies, a decrease of 43,000 on the previous three-month period.

Vacancies were down by 256,000 from a year ago, although they remained 187,000 above the level in January to March 2020, before the pandemic.

Pay growth overtakes inflation

UK households’ spending power has increased, with new figures showing that wage growth in July was higher than inflation for the first time in more than a year.

Regular pay, excluding bonuses, rose by 7.8% in May to July 2023 compared with the same period a year earlier, the Office for National Statistics (ONS) said.

This was ahead of the consumer prices index (CPI) measure of inflation for July which eased to 6.8%, from 7.9% in June.

“Earnings in cash terms continue to increase, at a record rate outside the pandemic-affected period,” said ONS director of economic statistics Darren Morgan. “Coupled with lower inflation, this means people’s real pay is no longer falling.”

The monthly report also revealed an increase in the unemployment rate, from 4.2% to 4.3%, and a decrease in job vacancies.

“Job vacancies have fallen below the million mark for the first time since the summer of 2021, when the reopening of economy created huge demand for workers,” Morgan said. “However, they still remain significantly above pre-Covid levels.”

The number of working days lost to strikes rose in July, primarily in the education and heath sectors, but the overall number is still below what it was a few months ago.

UK wages have ‘stalled’ since 2008

The UK has seen 15 years of slow wage growth, leaving workers thousands of pounds worse off every year.

If pay had continued to grow at the pace seen before the 2008 financial crisis, the average employee in the UK would be earning £11,000 more per year than they do now. That’s taking prices into account.

The figures come from the Resolution Foundation, a think-tank which focuses on improving living standards for people on low to middle incomes.

The findings, shared exclusively with the BBC’s Panorama programme, also reveal a widening gap between typical household incomes in the UK compared with Germany. In 2008 the gap was over £500 a year, but now it is £4,000.

Torsten Bell, chief executive of the Resolution Foundation, said that the wage stagnation seen over the past 15 years is “almost completely unprecedented”.

“Nobody who’s alive and working in the British economy today has ever seen anything like this,” Bell told the BBC.

“This is definitely not what normal looks like. This is what failure looks like.”

Xiaowei Xu, senior research economist at the Institute for Fiscal Studies, said that the net result is an “absolutely massive difference in living standards” that ends nearly 60 years of consistent growth.

In the past year, millions of UK workers have also effectively had a pay cut as wages have failed to keep up with high inflation.

Wage rises still outpaced by soaring inflation

UK workers are seeing their wages rise at the fastest rate in more than 20 years, but the increase still lags behind inflation.

In the year to July to September 2022, average total pay (including bonuses) increased by 6.0% and regular pay (excluding bonuses) increased by 5.7%.

This is the strongest growth in regular pay recorded since 2000, excluding the pandemic, the Office for National Statistics (ONS) said.

However, inflation is at a 40-year high of 10.1% after a sharp rise in energy and food prices, driven by the war in Ukraine.

Taking inflation into account, average pay including bonuses fell by 2.6% and regular pay fell by 2.7%.

“With average total pay… not keeping pace with inflation, some people are looking to work more hours or take on an additional role to supplement incomes to keep pace with rising costs,” commented Gareth Vale, director of operations at employment agency ManpowerGroup, quoted by BBC News. “Employers will need to keep an eye on this in terms of staff wellbeing and the impact it could have on overall productivity and growth.”

On Thursday, Chancellor Jeremy Hunt will deliver his Autumn Statement setting out plans to get the economy back on track, with spending cuts and tax rises expected.

The Times reported on Tuesday that Hunt will announce a significant rise in the national living wage as well as new cost-of-living payments targeted at the poorest households.