Wages are rising at their fastest rate in more than 20 years, but still lag well behind the soaring cost of living. Regular pay rose by 5.7% in the year to September, the fastest growth since 2000 excluding the pandemic, when people got big rises returning to work from furlough.
However, when adjusted for rising prices, wages fell by 2.7%. The cost of living is currently rising at its fastest rate in almost 40 years, in part due to the war in Ukraine. Energy and food prices have shot upwards, leaving many people struggling to pay their bills.
ManpowerGroup, one of the UK’s biggest recruiters, told the BBC that the gap between wages and prices was “putting more and more pressure on households”.
The UK unemployment rate rose slightly to 3.6% in the three months to September, up from 3.5% in August, official figures show. However, while this is near a 50-year low, the Bank of England has warned that unemployment will nearly double by 2025 as the UK goes through a tough recession.
On Thursday, Chancellor Jeremy Hunt will set out his plans to get the economy back on track, with spending cuts and tax rises expected.
The Times reported on Tuesday that Mr Hunt and the prime minister will announce a significant rise in the national living wage and target new cost-of-living payments at the poorest households.
Commenting on the latest figures, Mr Hunt said he understood “people’s hard-earned money isn’t going as far as it should”.
“Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make on Thursday.”
But Labour’s shadow chancellor, Rachel Reeves, said the UK was paying for “12 years of Tory economic mistakes”.
“Real wages have fallen again, thousands of over-50s have left the labour market and a record number of people are out of work because they’re stuck on NHS waiting lists or they’re not getting proper employment support.”
With job vacancies still near a record high and unemployment low, most employers are being forced to put up wages to attract the workers they need.
However, in the year to September, pay growth was much stronger in the private sector than the public sector, at 6.6% versus 2.2%.
The Office for National Statistics (ONS) said this was the largest difference between public and private it had seen outside of the pandemic.
The proportion of people neither working nor looking for work rose again, the ONS said. Older workers continued to leave the labour market, with the number classed as long-term sick increasing to a fresh record.
There was also a drop in the proportion of younger people working, possibly due to recent strikes.
“August and September saw well over half a million working days lost to strikes, the highest two-month total in more than a decade, with the vast majority coming from the transport and communications sectors,” said Darren Morgan, director of labour and economic statistics at the ONS.
“With real earnings continuing to fall, it’s not surprising that employers we survey are telling us most disputes are about pay.”
‘I’m losing care staff to Amazon’
Josh Hawker, a director at care home company AbleCare, says the firm has been struggling to recruit for a few months now.
AbleCare, which runs six care homes around Bristol and South Gloucestershire, is also finding it difficult to retain staff, with carers tempted away by high pay offers outside of the sector that the business cannot compete with.
“I’m getting really fed up with reading resignation letters that say: ‘I love my job, I don’t want to go, I love looking after the residents but I have to put my family and myself first,'” Mr Hawker says.
“They’re getting offers of 20 or 30% higher than we can possibly pay, to go and work at places like Amazon and the big supermarkets. What can you say to them? What can you say other than ‘fair enough’?”, he says.
The company has done what it can to raise pay, with its overall wage bill rising by 10%, and has started to offer health insurance as an incentive for staff. But rising costs across the business are limiting its room to boost salaries.
NEWS ANALYSIS
Perhaps the starkest number contained in the latest employment figures is the record gap between pay rises in the private and public sectors.
At 2.2%, public sector pay rises are languishing well behind the 6.6% pay rises seen in the private sector and will add to simmering industrial tensions which have already seen nurses vote for strikes for the first time ever. Today’s record gap will be seized on by unions representing public sector workers.
The number of vacancies – while still high – fell for the fourth month in a row which suggests that employers are scaling back their hiring intentions as they become gloomier about the prospects for the economy.
But what is most baffling to economists is that the size of the potential workforce continues to shrink. Some have left the country after Brexit, many are choosing to stay in education, but the increase in the over-50s who are unwilling or unwell enough to work continues to rise despite the rising economic pressures on household incomes.
Neil Carberry of the Recruitment Employment Confederation trade group said the “exceptional growth” in demand for new workers seen this year was at an end.
But he added: “Despite increased levels of employer caution, vacancies are still at historically high levels – it is still a good time to be looking for work. Unemployment remains at record lows, while employment is still below February 2020 levels.”
But Gareth Vale, director of operations at ManpowerGroup, said falling real terms wages were hurting households.
“What we have seen is some employers providing one-off payments rather than committing to longer term salary increases, but this is going to ultimately drive many people into looking for additional work… just to be able to pay for bills and for food.”
Source: bbc.cm
