ONS Reports Lowest Wage Growth in over 2 Years as Unemployment Rises

November 12, 2024 TruthUSA

Government ministers have vowed to address the issue of ‘spiraling inactivity’ and stimulate the economy to reach an 80 percent employment rate.

Recent data shows that UK wage growth has dropped to its lowest point in over two years, coinciding with a rise in the unemployment rate, according to official figures.

The annual growth rate of average regular earnings, excluding bonuses, was 4.8 percent in July to September, down from 4.9 percent in the previous quarter. This is the lowest level since the period ending in June 2022, as reported by the Office for National Statistics (ONS) on Tuesday.

Despite this decline, earnings growth continues to outpace inflation, with pay increasing by 2.7 percent.

In response to the latest labor market figures, Liz McKeown, the ONS director of economic statistics, stated, “Growth in pay excluding bonuses has slowed again this month to its lowest rate in over two years.”

She also mentioned that pay growth including bonuses rose to 4.3 percent, influenced by one-off payments to public sector employees made the previous year.

Wages play a significant role in inflation, and with the deceleration in pay growth, the Bank of England recently reduced interest rates from 5 to 4.75 percent. This decision reflects the ongoing progress in reducing inflation following a prolonged period of high interest rates implemented by the bank to combat price increases.

Unemployment

Unemployment data revealed an increase in the rate to 4.3 percent in the three months up to September, up from 4 percent in the previous quarter and exceeding the 4.1 percent predicted by most economists.

This rate is higher than the previous year and the levels before the COVID-19 pandemic.

The ONS advised caution in interpreting unemployment figures due to the ongoing low response rates to its job survey. McKeown mentioned on social media platform X that enhancements to data collection introduced earlier this year are still being incorporated.

In September, the number of individuals on payrolls saw a slight decrease, with the ONS noting a continued slowdown in annual growth.

“Job vacancies have once again dropped, a trend observed over the past two years,” McKeown added.

From August to October, there was a decrease in vacancies by 35,000 compared to the previous quarter, totaling 831,000. This marks the 28th consecutive drop in vacancies, though current levels still surpass those before the pandemic.

The economic inactivity rate, representing the percentage of individuals aged 16 to 64 who are not part of the labor force, was estimated at 21.8 percent in July to September 2024. Inactivity numbers were lower in the latest quarter and below those of a year ago.

Growth Mission

Downing Street has committed to addressing unemployment and economic inactivity as part of its growth mission to achieve an 80 percent employment rate. Work and Pensions Secretary Liz Kendall highlighted that around 2.8 million individuals in the UK are unemployed due to long-term illness.

Recently, the Labour party announced a £240 million investment in local services to support employment and reduce inactivity. This announcement preceded the release of the Get Britain Working White Paper, outlining government plans to eliminate barriers to work.

In a statement, Kendall emphasized that the plan aims to “address spiraling inactivity, enhance economic growth,” and contribute to the ambitious goal of an “80 percent employment rate.”

According to the British Chambers of Commerce (BCC), employers are struggling to fill job vacancies, hampering operations and profitability. BCC Director General Shevaun Haviland welcomed the government’s financial injection and urged for swift implementation of labor market reforms.

Business leaders cautioned that changes in the Autumn Budget could impede economic growth and employment.

Hospitality industry leaders recently expressed concerns that adjustments to the employer National Insurance Contribution threshold could lead to business closures and job losses within a year.

British supermarkets Asda and Sainsbury’s also warned that tax modifications in the Budget will raise prices, passing additional costs on to consumers.

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