Wages fall at fastest pace in a decade
Growth in employees’ average total pay (including bonuses) was 6.8% while growth in regular pay (excluding bonuses) was 4.2% in February to April 2022.
However, in real terms – adjusted for inflation – growth in total pay was 0.4% but regular pay fell on the year by 2.2%, the Office for National Statistics revealed.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Wages are falling faster than they have for over a decade – once you take inflation into account. 5.72 million public sector workers have seen a massive effective pay cut at a time of runaway price rises – with pay up just 1.5% while inflation was up 6.5%.”
Elsewhere, the Labour Force Survey estimates for February to April 2022 showed that the UK employment rate increased 0.2 percentage points to 75.6%. However, this is still below pre-coronavirus pandemic levels.
The increase in full-time employees increased in the quarter, but this was partially offset by a decrease in the number of part-time employees.
Meanwhile, the number of self-employed workers fell during the coronavirus pandemic and has “remained low”. Its latest estimate of payrolled employees for May revealed a monthly increase of 90,000 to a record 29.6 million.
And the unemployment rate for the quarter decreased by 0.2 percentage points, taking the figure to 3.8%. The ONS noted that those unemployed for up to six months increased over the period – the largest increase since late 2020.
However, this was offset by decreases in those unemployed for over six months, with those unemployed for between six and 12 months decreasing to a record low.
Another new record relates to job vacancies in March to May 2022 which now stands at 1.3 million. But the ONS said the rate of growth in vacancies continued to slow down.
‘Nightmare for consumers’
Laith Khalaf, head of investment analysis at AJ Bell, said: “The economy might be stalling, but the labour market is still extremely tight, thanks in no small part to the large number of people who left the workforce during the pandemic. Job vacancies now stand at a record 1.3 million, and while growth in that number is slowing, the figure itself is still climbing, which of course makes life more difficult for businesses looking to recruit.”
Khalaf added: “The red hot labour market leaves little option for the Bank of England but to keep pressing down on the emergency brake pedal of interest rate hikes. The UK economy unexpectedly shrank in April, but the bank won’t pay too much attention to that, seeing as it was only one month’s reading, and was heavily distorted by the winding up of the Test and Trace service. The Bank of England has to prove it’s serious about controlling inflation to maintain credibility, even though it’s raising rates into a slowing economy. The result is a nightmare for consumers, who will face higher mortgage bills on top of rising fuel and energy bills. The cost of living package provided by the government will help, but ironically it might spur the central bank to raise rates more aggressively.”