UK’s wage growth slows, job vacancies drop: Report

on Dec 12, 2023
  • The growth in total average earnings in the UK fell significantly from 8% to 7.2%.
  • There was a notable drop in job vacancies, with a decline of 45,000 to 949,000.
  • Real pay, which factors in inflation, saw only a marginal increase of just over 1%.

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In a recent update that has sparked concern across the United Kingdom, the Office for National Statistics (ONS) revealed troubling trends in the country’s labour market, indicating a significant slowdown in pay growth and a decrease in job vacancies. These developments point towards a stagnating economy and raise questions about the future of the UK’s workforce and economic stability.

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According to the ONS report, there has been a sharp decline in the growth of average earnings, falling from 8% to 7.2% in the three months leading up to October. This reduction surpasses the expectations of financial markets, indicating a more severe economic slowdown than anticipated. Concurrently, the number of job vacancies experienced a notable decrease, dropping by 45,000 to 949,000 during a period of stalled growth.

This alarming situation has critical implications for the Bank of England, which closely monitors pay increases as an indicator of inflationary pressures within the economy. The current data, however, suggests a potential easing of concerns regarding a wage-price spiral, a situation where rising wages lead to increased prices, thereby fueling further wage demands.

Private vs public

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Delving deeper into the ONS’s findings, the disparity in pay growth between the private and public sectors becomes apparent. The private sector saw a 7.2% increase in total pay, while the public sector experienced a slightly lower growth of 7.1%. When considering regular pay, which excludes the impact of bonuses, the private sector’s increase stood at 7.3%, compared to 6.9% in the public sector.

However, the most striking aspect of this report is the minimal increase in real pay, which accounts for the gap between earnings growth and the rate of inflation. This figure saw a meagre rise of just over 1%, highlighting the diminishing purchasing power of the UK workforce amidst rising living costs.

The ONS has faced challenges in gathering accurate labour market data due to issues with the Labour Force Survey, leading them to rely on alternative sources. Despite these difficulties, the employment and unemployment rates remained relatively stable, recorded at 75.7% and 4.2%, respectively.

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