Newly released figures from the Office for National Statistics show that the pace of wage growth in the British job market has slowed, although it is still outpacing price rises. The statistics cover the final three months of 2023, showing that pay, excluding bonuses, increased by 6.2% compared to the same period a year before. However, this only translated to a 1.9% increase when taking inflation into account. The findings come after the Office for Statistics Regulation suspended its Labour Force Survey due to falling response rates; a fully updated survey will not be available until September.
Andrew Bailey, the governor of the Bank of England, has said that the ONS figures on wage growth are the Bank’s only reliable method for gauging unemployment, despite recent unreliability of jobs market data. The reversals in pay growth, high interest rates, and a falling number of job vacancies are all factors that will present challenges to those setting monetary policy in the months to come.
On the bright side, the latest unemployment figures suggest that the jobs market is holding relatively firm, with the unemployment rate in the UK dropping to 3.8% in the final three months of 2023. This shows a slight reduction from the 3.9% recorded from September to November of that year. According to Chancellor Jeremy Hunt, the reduction is “good news,” and adds that tax cuts are a key part of the government’s plan to create jobs and stimulate economic growth.
Bucking the trend of the 19 consecutive declines in vacancies to date, the latest data shows that the downturn in the quantity of job vacancies may be slowing somewhat. Indeed, while wage growth has been slowing in recent months, it remains ahead of inflation, a positive sign for workers
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