Real earnings fall by a record 3.0%, ONS reveals, as UK labour market hits plateau
Growth in employees’ average total pay (including bonuses) was 5.1% and growth in regular pay (excluding bonuses) was 4.7% in the quarter April to June 2022, labour market data from the Office for National Statistics revealed today. In real terms (adjusted for inflation), over the year, total pay fell by 2.5% and regular pay fell by a record 3.0%. The ONS said there was ‘little change’ in labour market rates during the period, with employment decreasing 0.1%, unemployment increasing 0.1%, and the economic inactivity rate remaining unchanged.
Adrian Lowery, financial analyst at UK wealth manager Evelyn Partners, comments: “Soaring inflation is really starting to eat into spending power, with real earnings falling by a record 3.0% despite a hefty average nominal pay increase of 4.7%. The difficulty for workers now in both public and private sectors is that increased pay demands to cope with inflation must contend with the depressed economic outlook, and employers’ uncertainty over their own earnings.
“The robust UK labour market seems to be at a plateau, with employers squaring their current need to attract and retain employees with the clouds of economic weakening on the horizon. A leading indicator of caution could be the first fall in the number of job vacancies since June to August 2020: there were 1.274 million in May to July 2022, a decrease of 19,800 from the previous quarter.
“The fear is that this could be about as good as it gets for the UK labour market, with the Bank of England forecasting recession from the end of this year and through 2023. But the Chartered Institute for Personal Development’s latest survey yesterday was quite positive, revealing record pay awards and no signs of redundancy intentions rising among employers. The CIPD added that the UK’s ‘hiring boom’ is set to continue into the next quarter ‘as private sector pay awards reach new highs’, with the labour market remaining ‘incredibly tight’, candidates ‘hard to come by’ and employers are especially keen to retain staff.”