The latest analysis reveals that the average worker has seen only a marginal increase of £3.80 per week compared to a year ago. This slight uptick in wages has been overshadowed by a significant surge in living costs, according to the Resolution Foundation.
Official data from the Office for National Statistics indicates that Britain’s unemployment rate has climbed to 5.1% in the three months leading up to October, marking the highest level since 2016 outside the Covid pandemic. Reports suggest that employers refrained from hiring new staff in anticipation of the recent Budget, and a national insurance hike further dampened demand for employees.
Despite the challenges, there are signs that the decline in job vacancies is stabilizing, hinting at a potential resurgence in hiring activity. While wage growth has decelerated, average pay levels are managing to slightly outpace the inflation rate.
In real terms, wages increased by a mere 0.5% during the October quarter, as reported by the ONS. Over the past year, average weekly earnings have risen by a meager £3.80 in real value, equivalent to covering the cost of a cup of coffee, as highlighted by the Resolution Foundation.
Many workers are still feeling the repercussions of the 2008 financial crisis, enduring a prolonged period of stagnant wages. Despite a brief resumption of real wage growth, various disruptions, including the Brexit vote and the Covid-19 pandemic, have hindered sustained progress. Forecasts suggest that wage growth is anticipated to remain sluggish, with a projected total growth of only 2% by 2031, as per the latest OBR predictions.
Pre-inflation wage growth slowed to 4.6% in the October quarter, prompting experts to suggest a possible interest rate cut by the Bank of England. The recent data also revealed a significant drop of 38,000 employees on payrolls in November, the largest decline in five years, reflecting further strain on the job market.
Younger workers are particularly struggling in the current hiring climate, with 85,000 more unemployed individuals aged between 18 to 24 in the three-month period leading up to October, marking the sharpest increase since November 2022.
Liz McKeown, ONS director of economic statistics, described the prevailing labor market conditions as weakening, citing a decrease in payroll numbers and an uptick in the unemployment rate, especially among younger age groups.
TUC General Secretary Paul Nowak emphasized the importance of boosting demand to stimulate the jobs market amidst rising unemployment and slowing wage growth. He called for a proactive approach, urging the Bank of England to consider further interest rate cuts to support economic recovery and provide assistance to those facing unemployment challenges.
