ONS stats | Wages have highest annual growth since records began

Wages have highest annual growth since records began

UK unemployment has grown in the three months to June as the average pay of workers reaches record levels, new figures from the Office for National Statistics (ONS) reveal.

According to the figures, the unemployment rate reached 4.2% in the most recent quarter, up 0.3% from the previous one. It is the highest rate of unemployment since the three months to October 2021, bringing the rate above pre-pandemic levels.

The average wage is also at a record high, the figures show. Regular pay, excluding bonuses, reached 7.8% compared to the year before, the highest annual growth rate since records began in 2001.

Real pay rose 0.1% in the year, the first time since October 2021 that real wages have increased, said the ONS. But when adjusting for Consumer Price Index (CPI) inflation, the measure was 0.6% down on the year, the smallest reduction seen since November 2021.

Darren Morgan, ONS director of economic statistics, said: “The number of unemployed people has risen again while the number of people working has fallen back a little.

“This is mainly due to people taking slightly longer to find work than those who started job hunting in recent months.

“The drop in those neither working nor looking for work is mainly among those looking after their family or home. Meanwhile the number of people prevented from working by long-term sickness has risen again to a new record.

“Job vacancies have now fallen over a quarter of a million since this time last year. However, they remain significantly above pre-Covid levels. Earnings continue to grow in cash terms, with basic pay growing at its fastest since current records began.

“Coupled with lower inflation, this means the position on people’s real pay is recovering and now looks a bit better than a few months back.”

Could hiked wages cause increased interest rates?

Despite increased wages benefiting much of the workforce during the cost-of-living crisis, some spectators warn that record-breaking pay slips could add to inflation and potentially force the Bank of England to increase interest rates.

“Wage increases may bring some short-term relief for workers,” says Greg Marsh, CEO at Nous.co. “However, in the long run, there’s a risk high pay growth contributes to making high inflation more persistent. This means more Bank of England interest rate hikes are on the cards, causing serious pain for mortgage holders.”

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Record high wages are making the job market more competitive for employers in attracting talent. Marsh says that if firms can’t afford to increase their pay offering, they should look at alternative ways of attracting candidates.

He continues: “At the same time, many businesses are seriously struggling to keep up with pay demands. Offering strong workplace benefits that genuinely help employees with their finances can make a huge difference to people’s lives – and how they feel about their employer too.

“Plus it makes sense for businesses. Non-salary perks are a cost-effective way of attracting and retaining talent.”

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