Wage growth slows as unemployment rises, but earnings still outpacing inflation

12 March 2024 , 08:34

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Average regular pay growth dropped to 6.1% in the quarter to January (Image: PA Wire/PA Images)

UK wage growth has slowed down again as the unemployment rate rises, but earnings are still beating inflation, according to official figures.

The Office for National Statistics (ONS) reported that average regular pay growth, excluding bonuses, dropped to 6.1% in the quarter to January. This is down from 6.2% in the three months to December and is the slowest growth for over a year.

However, when considering Consumer Prices Index (CPI) inflation, real regular wages increased by 2%. This is the highest since summer 2019, not counting the years affected by the pandemic.

The ONS also revealed that the UK unemployment rate unexpectedly rose to 3.9% in the three months to January, up from 3.8% in the previous three months. Meanwhile, job vacancies fell by 43,000 quarter on quarter in the three months to February to 908,000 marking the 20th consecutive drop.

Most economists had predicted the unemployment rate would stay at 3.8%. Liz McKeown, ONS director of economic statistics, commented: "Recent trends in the jobs market are continuing, with earnings, in cash terms, growing more slowly than recently but, thanks to lower inflation, real-terms pay continues to increase."

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"The number of job vacancies has also been falling for coming up to two years, though the total remains more than 100,000 above its pre-pandemic level. Over the last year, there was little change in the proportions of people who are employed, unemployed or neither working nor looking for work, though the overall number of people in work is still rising."

Lawrence Matheson