Wage Growth in UK Holds Steady as Unemployment Rises: ONS
The UK is experiencing a rise in the number of unemployed people per vacancy, approaching pre-pandemic levels. A recent review shows that the labour market is generating fewer jobs, but providing higher pay to those currently employed.
In the first quarter of the year, UK wage growth remained strong, with the unemployment rate rising above estimates from a year ago, according to the Office of National Statistics (ONS).
During the same period, the number of unemployed people increased to 4.3%, the highest since 2023. Vacancies decreased by 2.8%, with 13 out of 18 industry sectors experiencing a decline in job openings.
Despite the decrease in vacancies, pay rises excluding bonuses reached 6%, with real pay adjusted for inflation at 2% and total real pay at 1.7% in the first quarter. Liz McKeown, director of economic statistics at the ONS, stated that real pay growth is at its highest level in over two years.
Secretary of State for Work and Pensions Mel Stride commented on the ONS figures, noting a resilient labour market and efforts to support employment growth. The jobs market is showing signs of cooling, with a decrease in both employment and workers on payroll.
With 898,000 estimated vacancies in February to April, there was a decrease of 26,000 from the previous quarter. Different sectors saw varying changes in vacancies, with manufacturing and human health sectors recording the largest falls.
The ONS reported 1.6 unemployed people per vacancy, indicating a slight easing in the labour market compared to the previous period. The economic outlook suggests that with wages surpassing inflation, the Bank of England is likely to monitor wage growth’s impact on inflation.
The UK recently recovered from a technical recession, showing a 0.6% growth in the first quarter of the year. As the employment rate remains below estimates from a year ago, economists are analyzing the impact of the economic recovery on employment and pay levels.
Economists expect wage growth to remain high due to various factors, but the cooling labour market may ease wage pressures in the second quarter of 2024. Overall, the UK’s labour market is experiencing shifts and challenges as the economy continues to recover.
