The wage growth rate is the highest it has been in over two decades, but it still lags significantly behind the rising cost of living.
In the year leading up to September, regular pay increased by 5.7%, the fastest increase since 2000, excluding the pandemic, when people returned to work from furlough to receive substantial raises.
However, when wages are adjusted for inflation, they decline by 2.7%.
Partially as a result of the conflict in Ukraine, the cost of living is rising at its fastest rate in nearly four decades.
Energy and food prices have skyrocketed, leaving many individuals unable to pay their bills.
ManpowerGroup, one of the largest recruiters in the United Kingdom, told that the wage-price gap was “putting increasing pressure on households.”
In the three months leading up to September, the unemployment rate in the United Kingdom increased to 3.6% from 3.5% in August, according to official data.
While this is close to a 50-year low, the Bank of England has warned that unemployment will nearly double by 2025 due to a severe recession in the United Kingdom.
On Thursday, Chancellor Jeremy Hunt will outline his plans for reviving the economy, which will likely include spending cuts and tax increases.
The Times reported on Tuesday that Mr. Hunt and the prime minister will announce a substantial increase in the national living wage and new cost-of-living payments aimed at the poorest households.
Mr. Hunt, commenting on the most recent statistics, acknowledged that “people’s hard-earned money is not going as far as it should.”
“Tackling inflation is my top priority, and this will inform the difficult tax and spending decisions we will make on Thursday.”
Rachel Reeves, the shadow chancellor for Labour, stated that the United Kingdom was paying for “12 years of Tory economic mistakes.
Real wages have fallen again, thousands of over-50s have left the labor force, and a record number of people are unemployed because they are stuck on NHS waiting lists or are not receiving adequate employment support.
With job openings remaining near record levels and unemployment remaining low, most employers are compelled to raise wages to attract the workers they require.
However, in the year leading up to September, private-sector pay increased by 6.6% compared to 2.2% in the public sector.
The Office for National Statistics (ONS) reported that this was the largest disparity between public and private since the pandemic.
The ONS reported that the proportion of people who are neither working nor looking for work increased again. The number of older workers leaving the labor force reached a new high, while the number of those classified as long-term sick reached a new high.
There was also a decline in the percentage of young people who are employed, possibly as a result of 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,” said Darren Morgan, director of labor and economic statistics at the ONS. The vast majority of these days were lost in the transport and communications sectors.
“Because actual incomes continue to decline, it’s not surprising that most pay-related disputes are reported by the employers we surveyed.”
According to Josh Hawker, director of AbleCare, the company has struggled to recruit for several months.
AbleCare, which operates six care homes in Bristol and South Gloucestershire, is also having trouble retaining staff due to high-paying job opportunities outside the industry that it cannot match.
“I’m sick and tired of reading resignation letters that state, ‘I love my job, I don’t want to leave, I love caring for the residents, but I must put my family and myself first'” Mr. Hawker says.
“They are receiving offers 20 to 30 percent higher than what we can pay to work at Amazon and the supermarkets. What are you able to say? What else can you say besides “acceptable”? “He states.
The company has done all it can to increase pay, with its total wage bill increasing by 10 percent, and has begun offering health insurance as an incentive for employees. However, the company’s ability to increase salaries is hampered by rising business costs.
The record pay gap between the private and public sectors is perhaps the most startling statistic contained in recent employment data.
The public sector’s 2.2% wage increase lags well behind the private sector’s 6.6% pay increase and will add to the simmering industrial tensions that have already seen nurses vote for strikes for the first time. Unions representing public sector workers will exploit today’s record unemployment rate.
Even though the number of openings remains high, it has decreased for the fourth consecutive month, suggesting that firms are reducing their recruiting plans as they become more pessimistic about the economic outlook.
But what economists find most perplexing is the continuing decline of the prospective labor force. Despite mounting economic pressures on household finances, the number of over-50s who are unwilling or unable to work continues to rise. Some have fled the country in the wake of Brexit, while others have chosen to continue their studies.
Neil Carberry of the Recruitment Employment Confederation stated that this year’s “extraordinary rise” in the desire for new personnel has come to a stop.
He then added: “Despite heightened company caution, job openings remain at historically high levels; it is still a fantastic moment to be searching for employment. The unemployment rate maintains at record lows, although employment numbers remain below those of February 2020.”
However, Gareth Vale, director of operations at ManpowerGroup, stated that declining real wages were hurting households.
Some firms have provided one-time payments rather than committing to longer-term salary increases, but this will ultimately force many individuals to seek other employment… just to pay their bills and buy food.
