Annual growth in total earnings including bonuses was 5.8%. Annual average regular earnings growth was 6.1% for the private sector and 5.3% for the public sector. The wholesaling, retailing, hotels and restaurants sector saw the largest annual regular growth rate at 6.3%, followed by the construction sector at 6.2%.
The figures means wage growth is still high and well above the rate of overall price rises. Inflation stood at 3% in January.
Average weekly earnings (AWE) were estimated at £711 for total earnings and £667 for regular earnings in January 2025.
Job vacancies and unemployment
The estimated number of vacancies in the UK from December 2024 to February 2025 was 816,000. Vacancies are broadly unchanged on the quarter (with early estimates suggesting a small increase of just 1,000) and are still above pre-Covid levels.
The UK unemployment rate for people aged 16 years and over was estimated at 4.4% from November 2024 to January 2025. This is above estimates of a year ago, and up in the latest quarter.
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Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “UK pay growth remained resilient in the three months to January, despite the jobs market coming under strain as businesses brace for Chancellor Rachel Reeves’ minimum wage increase and the National Insurance rate hike for employers set to take effect from the start of the new financial year in April.
“Business leaders have warned that the Chancellor’s decision for employers to shoulder the majority of the tax rises announced in her maiden Budget last October is threatening the health of the labour market. The jobs market showed some signs of strain, with unemployment holding at 4.4% in the three months to January, while the number of payrolled employees fell on the quarter.
“Interestingly, vacancies remained broadly the same between December to February, with hints of a slight increase, after more than 30 consecutive periods of falling numbers – perhaps a reflection of the start of the year when job openings typically ramp up.”
Nicholas Hyett, investment manager at Wealth Club, said: “The UK labour market held firm in January, with little change from the Christmas period. That’s in line with expectations but will still be a bit of a relief for the Government, given worries that rising minimum wages and increased employers’ National Insurance costs might see employers look to trim their wage bills.
“Average wage growth continues to comfortably outpace inflation, which should continue to ease the cost-of-living crunch consumers experienced in the aftermath of the pandemic. That is good news for the economy more broadly – helping to boost domestic demand.”
