According to official data released today, real salaries decreased at the quickest pace in more than ten years in the fourth quarter of last year.
Total compensation decreased by 4.3% yearly in comparison to the lowest CPI inflation since 2009, while regular salaries decreased by 3.6%.
This is true even though regular salaries had the largest non-Covid annual cash-terms growth of 6.7% for the three months ending in December.
A bleak picture became apparent as both unemployment and employment ticked upward and there are indications that fewer individuals are avoiding the labor market due to the cost-of-living problem. However, inactivity levels are still greater than they were before to the epidemic.
The UK is “resilient,” according to Chancellor Jeremy Hunt, and unemployment is still “near record lows.”
In trying times, keeping unemployment rates near to historic lows is a measure of our labor market’s resiliency, he added.
The greatest thing we can do to increase the purchasing power of people’s salaries is to stay with our goal of halving inflation this year.
The expected number of openings decreased by 76,000, marking the seventh straight decrease, indicating a slowdown in the labor market.
According to the ONS, this was a result of business hesitation towards hiring due to economic constraints and uncertainties.
“The fourth quarter of 2022 saw fewer individuals staying entirely outside of the labor market, with some going right back into a job and others beginning to seek employment again,” said Darren Morgan, director of economic statistics at the ONS. As a result, while employment increased once again, unemployment also increased somewhat.
The last period saw a minor narrowing of the public and private sectors’ earnings growth gaps, which are nevertheless quite high. However, overall remuneration is still being outpaced by growing costs.
Although remaining at historically high levels, job openings have decreased once again, with the smallest firms seeing a particularly significant decline.
“The amount of working days lost to strikes increased significantly once again in December.” Although the health sector made a significant contribution this month, the area of transportation and communications was still the most severely hit.
“Businesses are begging for people to fill job gaps at all skill levels, and this must be the government’s number one emphasis if it’s serious about economic development,” said Jane Gratton of the British Chambers of Commerce.
“There are still a staggering 1.134 million open positions, which is slowing businesses in their tracks.” It indicates that they are having difficulty completing the orders on their books, which makes any aspirations for expansion improbable.
The pressure on salaries is also increasing, and it is presently at its greatest levels outside of the epidemic in the private sector. The Bank of England has acknowledged this as a factor in its decisions to boost interest rates in an effort to control inflation.
“Government plans to use the UK’s untapped labor force are a start in the right direction, but we need to see more action to remove the obstacles keeping people back,” said one expert.
The chance for the Chancellor to relieve pressure on families who have been driven out of the labor market by childcare expenses is tremendous in the Spring Budget.
In order to quickly retrain older people and assist them return to the workforce with their skills and experience, they require carefully designed career guidance, job seeker support, and possibilities for fast retraining.
»Pay decreases by 4.3% compared to the skyrocketing CPI«