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UK wage growth slows as job vacancies fall

UK wage growth slows as job vacancies fall
Rebecca Goodman
Written By:
Rebecca Goodman

Average UK wage growth excluding bonuses slowed to 7.3% between August and October, official figures reveal.

This is a decline from 7.8% recorded between June and August, data from the Office for National Statistics (ONS) revealed. Once bonuses were included, annual wage growth was 7.2% in the three months to October.

When factoring in inflation, annual growth in total pay rose 1.3% in the last year, while regular pay was up 1.4%.

Regular wage growth in the public sector was 6.9% between August and October, one of the highest rates recorded since 2001. In the private sector it was slightly higher at 7.3%.

The number of job vacancies also fell by 45,000 to 949,000 between September and November. This is the 17th consecutive quarter where job vacancies have fallen, but the levels are still higher than they were before the pandemic.

There were an estimated 36.8 million jobs in September, an increase of 210,000 from June, including both employee jobs and self-employment jobs. The ONS noted that the estimated number of employee jobs has been on a largely upwards trend since September 2020, resulting in a record high of 32.5 million in September 2023.

Meanwhile, labour disputes meant that 131,000 working days were lost in October and three fifths of these were in the health and social work sector. Over the month, 49,000 workers were involved in strikes, which is the lowest number since June 2002.

‘Lost spending power’

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Wage rises still have an awfully long way to go to make up for the spending power we’ve lost over the past couple of years.

“They’ve beaten inflation slightly for five months, but they had been growing slower than price rises for a full 18 months. This time last year, total pay was down 4% in a year, and the OBR expects living standards in the coming financial year to be 3.5% lower than their pre-pandemic level.

“These wage rises aren’t smoothly distributed either, with wages in the financial and business sectors up 8.3% and manufacturing 7.4%, compared with construction at 5.2%. It’s also worth bearing in mind that inflation isn’t being felt equally. Food inflation was still running at 10.1% in October. The lower your income, the bigger the proportion of it you spend on essentials like food, so the harder this hits. It means lower earners are still struggling disproportionately.”

‘Little chance’ the Bank of England will raise rates

Derrick Dunne, CEO of YOU Asset Management, said: “The UK economy has defied all expectations over the past year and continues to display a level of resilience despite a challenging global macroeconomic backdrop.

“The rate of unemployment remains unchanged and, while the number of vacancies fell by 45,000 during the three months of July, around 949,000 jobs still need filling, suggesting that the UK’s job market remains relatively hot.

“This means that pay growth is now vastly outpacing inflation, which would have been a concern for the Bank of England a few months ago. However, inflation has come down significantly over the past month or so, meaning there is little chance the central bank will once again increase rates when it meets on Thursday.”