The latest analysis shows that the average worker’s weekly earnings have only increased by £3.80 compared to a year ago, largely overshadowed by a surge in living expenses. The Resolution Foundation reported that despite a slight rise in wages, the impact of escalating living costs has been significant.
Official data revealed a rise in the UK’s unemployment rate to 5.1% in the three months up to October, the highest outside of the Covid-19 period since 2016. This increase in joblessness coincided with reports of employers delaying recruitment due to uncertainties surrounding the recent Budget and a national insurance hike affecting demand for workers.
Although there has been a stabilization in the decline of job vacancies, indicating a potential willingness among businesses to rehire, wage growth has slowed down. Real wage growth, accounting for inflation, only saw a meager 0.5% rise in the three months leading to October, translating to a nominal increase of just £3.80 in weekly earnings over the past year.
The long-standing issue of wage stagnation, dating back to the aftermath of the 2008 financial crisis, has persisted for many workers. The Resolution Foundation highlighted that real wage growth has been sluggish, with interruptions from events like the Brexit vote and the pandemic. Projections from the Office for Budget Responsibility suggest that this trend of slow wage growth is likely to continue, with wages expected to grow by a modest 2% until 2031.
Inflation-adjusted wage growth has decelerated to 4.6% in the same period, prompting discussions about potential interest rate cuts by the Bank of England to address the economic situation. Recent data also indicated a significant drop in the number of employees on payrolls, particularly affecting younger workers, with a notable increase in unemployment among those aged 18 to 24.
Commenting on the labor market conditions, ONS Director Liz McKeown noted the ongoing weakness in hiring activity and a decline in job availability, leading to a rise in unemployment rates, especially among younger age groups. TUC General Secretary Paul Nowak emphasized the importance of boosting demand to revive the job market, calling for further economic support through measures like interest rate cuts to stimulate investment and consumer spending, while also highlighting the necessity of providing assistance to those currently unemployed.