Real terms pay in biggest drop since 2009
The ONS data found that growth in total pay (including bonuses) came to 5.9%, while growth in regular pay (excluding bonuses) totaled 6.6% between December 2022 and February 2023.
However, in real terms, accounting for inflation, total pay dropped by 3% and regular pay by 2.3% over the period. That’s among the largest falls in growth since comparable records began in 2001, and the biggest drop since 2009.
The ONS data also found that the number of job vacancies between January and March dropped by 47,000 to 1,105,000. That’s the ninth straight quarter in which job vacancies have fallen, with the ONS noting that respondents point to economic pressures as a factor holding back recruitment.
The employment rate for the period from December to February was found to be 75.8%, up by 0.2 percentage points from the preceding quarter. The increase was driven by part-time and self-employed workers, said the ONS, while the unemployment rate increased by 0.1 percentage points to 3.8%.
Jobs market at a turning point
Alice Haine, personal finance analyst at BestInvest, said that the increase in unemployment was a sign that the “red-hot employment market of the post-pandemic era” was cooling.
She added: “Britain’s unemployment rate may still be ultra-low, but with rapidly rising interest rates, slowing growth, sticky inflation, and employers still facing pressure to increase wages amid trickier business conditions, the nation’s labour market is at a turning point.”
This was echoed by Myron Jobson, senior personal finance analyst at interactive investor, who noted that the shortage of staff means that jobseekers “remain in the driving seat” in negotiating high pay and better positions.
He continued: “The growth in regular pay remains among the highest seen outside of the Covid-19 pandemic period. But the job market supply bottlenecks have fuelled the inflation fire, and has called into question whether workers are truly getting ahead.”