- If pay growth carries on at its current pace, wages will be up 2.2% in a year.
- Before inflation, wages in October-December were up 6.2% in a year excluding bonuses and 5.8% with them. Both were down from a month earlier.
- After inflation, wages rose 1.4% including bonuses and 1.8% excluding them.
- Unemployment fell on the quarter, employment rose and economic inactivity remained steady. Redundancies rose to their highest level since 2021 and vacancies fell for the 19th consecutive time.
The ONS has released employment and wage data for the year to October-December: UK Labour Market: February 2024 – Office for National Statistics (ons.gov.uk)
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“At first glance, there’s nothing to see here. Wages are well ahead of inflation, unemployment is down very slightly, employment up, and economic activity has remained level. But look closer, and there are some signs of weakness creeping into the labour market.
Wage rises are still powering ahead of inflation, putting money back in our pockets, which is a relief for millions of people struggling to pay the bills – and a headache for the Bank of England which is keeping a close eye on wage inflation. However, on closer inspection, those wage rises have slowed significantly. An awful lot of them came back in the summer, and since then wage growth has decelerated dramatically. If wages continued to rise at their current rate, they would be up just 2.2% in a year.
And while wage rises are welcome, they’re no use at all to you if you are unable to work. There are two alarm bells ringing on this front: the economic inactivity rate has remained level, but within those figures is yet another rise in those who cannot work because of long-term sickness. This has reached another record high. With health services stretched so thin, and waiting lists so long, there’s a risk this figure continues to rise.
Meanwhile, we have seen a spike in redundancies, taking us back to 4 per thousand – a level we haven’t seen since the beginning of 2021 – at the tail end of the coronavirus peak. It’s not significantly different to where redundancies were before the pandemic, but the rise in recent months has been notable. Back in August-October it was 2.2 per thousand. This could be a blip, but is well worth watching to see whether more structural weakness in the jobs market is on the way. The Office for Budget Responsibility has been predicting a rise in unemployment, and we will have to wait to see whether these are early signs of worse to come.
It’s a useful reminder that we all need something to fall back on when times are tough. We need to ensure we have the insurance cover we need to protect our families if we are too sick to work, and we need an emergency savings safety net in place in case of any nasty surprises. When we’re of working age, we should be working towards 3-6 months’ worth of essential expenses in an easy access account. And at the moment, if you shop around with online banks, building societies and savings platforms, you can make more than 5% interest on this cash into the bargain.”
Other figures from the release
- Pay growth for the private sector was 6.2%. For the public sector it was 5.8%.
- The unemployment rate was 3.8%, down 0.2 percentage points on the quarter, but a similar level to a year earlier.
- The employment rate was 75%, up 0.2 percentage points on the quarter, but down 0.2 percentage points over the year.
- The economic inactivity rate was unchanged on the quarter – at 21.9% – up 0.2 percentage points in a year thanks to record numbers who are too sick to work.
- In October-December, redundancies were up by 1.4 per thousand on the quarter to 4 per thousand. This hasn’t been so high since the start of 2021.
- Payrolled employees rose November-January, and hit 30.4 million – up 1.4% on the year. The rate of annual growth is slowing
- Vacancies in November-January fell in the quarter to 932,000 – the 19th consecutive fall – the longest ever recorded. They’re still above the pre-pandemic leve
