Summer sees a slight deceleration in wage growth

The UK labor market experienced a slight deceleration in wage growth over the summer. Latest statistics from the Office for National Statistics (ONS) revealed an average wage increase of 4.7% in the three months to August, down marginally from 4.8% in the previous quarter.

Rising Unemployment

The national unemployment rate experienced a slight upturn, moving from 4.7% to 4.8%. Job vacancies also decreased by 9,000, which represents a 1.3% decline during the same period. This marked the 39th consecutive period of declining job vacancies.

Impact on Younger Workers

Liz McKeown from the ONS highlighted that younger people were primarily affected by rising unemployment. Although there was a drop in economic inactivity due to fewer students and retirees, it was offset by increased inactivity from long-term illness and other factors.

Danni Hewson from AJ Bell indicated that the increase in employer national insurance contributed to the challenges faced by young part-time workers entering the market.

Steadying Labor Market

Chris Hare of HSBC described the labor market as fairly steady, predicting a gradual easing in wage growth and broader cost pressures.

The ONS noted a 6% annual growth in public sector wages, contrasting with a 4.4% rise in the private sector, marking the lowest in four years.

Redundancy and Real Wage Growth

• The redundancy rate for June to August increased to 3.8 per 1,000 employees.
• Inflation currently stands at 3.8%, resulting in a real wage growth of just 0.9%.
• Real weekly wages have risen by only £1.50 since last September, according to the Resolution Foundation.

Both the Liberal Democrats and the Resolution Foundation have expressed concerns over these modest gains, emphasizing ongoing cost-of-living pressures.

The ONS has committed to addressing concerns about the reliability of the unemployment data and continues to monitor the situation closely.