Wages fall at fastest pace in a decade
Salaries – including and excluding bonuses – rose in the three months to April, but once inflation is taken into account, regular pay fell by 2.2%, official statistics show.
Growth in average total employee compensation (including bonuses) was 6.8%, while growth in regular compensation (excluding bonuses) was 4.2% from February to April 2022.
However, in real terms – adjusted for inflation – total pay growth was 0.4%, but regular pay fell 2.2% on the year, the Office for National Statistics found.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Wages are falling faster than they have in over a decade – once you take inflation into account. 5.72 million public sector workers saw a massive effective pay cut at a time of meteoric price rises – with pay rising just 1.5% as inflation rose 6.5% .
Elsewhere, Labor Force Survey estimates from February to April 2022 showed the UK employment rate rose by 0.2 percentage points to 75.6%. However, this remains below pre-coronavirus pandemic levels.
The increase in the number of full-time employees increased during the quarter, but this was partially offset by a decrease in the number of part-time employees.
Meanwhile, the number of self-employed plummeted during the coronavirus pandemic and “remained low”. Its latest estimate of salaried employees for May showed a monthly increase of 90,000 to a record 29.6 million.
And the unemployment rate for the quarter fell 0.2 percentage points, bringing the figure to 3.8%. The ONS noted that the number of unemployed up to six months rose over the period – the biggest increase since the end of 2020.
However, this was offset by a decrease in the number of unemployed for more than six months, with the number of unemployed for six to 12 months falling to a record low.
Another new record is job vacancies from March to May 2022 which now stand at 1.3 million. But the ONS said the rate of growth in vacancies continued to slow.
‘Nightmare for consumers‘
Laith Khalaf, head of investment analysis at AJ Bell, said: “The economy may be at a standstill, but the labor market is still extremely tight, thanks in large part to the large number of people who have left the labor market during the pandemic. Vacancies are now at a record 1.3 million, and although growth in this number is slowing, the figure itself continues to rise, which, of course, makes life harder for businesses. who are looking to recruit.
Khalaf added: “The scorching labor market leaves the Bank of England little choice but to continue to press the emergency brake pedal of interest rate hikes. The UK economy contracted unexpectedly in April, but the bank won’t pay too much attention to it, as it was just a month’s worth of reading and was heavily skewed by the service’s sell-off. Test and Trace. The Bank of England must prove that it is serious about controlling inflation to maintain its credibility, even as it raises rates in a slowing economy. The result is a nightmare for consumers, who will face higher mortgage bills in addition to rising fuel and energy bills. The government-provided cost-of-living package will help, but ironically it could prompt the central bank to raise rates more aggressively.