Wage growth fails to keep pace with inflation
According to the Office for National Statistics (ONS), in October to December 2021 growth in average total pay (including bonuses) was 4.3% and growth in regular pay (excluding bonuses) was 3.7%.
But in real terms (adjusted for inflation which hit 5.4% in January), total and regular pay in the same period fell on the year at negative 0.1% for total pay and negative 0.8% for regular pay.
This is despite a backdrop of record number of employees, record vacancies, and booming job moves as 988,000 workers switched roles in the quarter.
Average total pay growth for the private sector was 4.6% in October to December 2021, while for the public sector it was 2.6%.
According to the ONS, the UK employment rate increased by 0.1 percentage points on the quarter to 75.5%. The number of self-employed workers remained low following decreases seen during the pandemic, however the number of employees increased on the quarter to another record high.
The unemployment rate decreased by 0.2 percentage points on the quarter to 4.1%, while the economic inactivity rate increased by 0.1 percentage points to 21.2%.
The ONS said the increase in economic inactivity since the start of the coronavirus pandemic was largely driven by those who are economically inactive because they are students or for ‘other’ reasons.
In the latest three-month period however, those who are inactive because they are students continued to decrease, while the increase was driven by those who are inactive because of long-term sickness and ‘other’ reasons.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “There was a yawning gulf in the jobs market at the end of last year, with millions of people enjoying a comfortable Christmas of bumper bonuses or new jobs, and millions more facing a horrible struggle.
“The lucky ones included almost a million people who switched jobs for something better. For people whose skills are in demand, there were some incredible opportunities, and the three-month period saw a record number of people switching jobs.”
The number of job vacancies in November 2021 to January 2022 rose to a new record of 1,298,400, an increase of 513,700 from its pre-coronavirus January to March 2020 level. However, the rate of growth in vacancies continued to slow down.
Louise Burns, director of Nineteen Recruitment, said: “It’s a bittersweet time for recruiters. We are rejoicing at the number of job opportunities while wailing at our desks over the lack of candidates. Employers are competing like crazy for candidates, driving salaries up into the stratosphere. With many businesses entering a potentially delicate period of post-pandemic recovery, this sort of situation is completely unsustainable.”