Even though inflation is out of control and pay packages are declining at a record rate, the employment market still seems to be robust.
In the quarter ending in May, overall earnings grew at an annual pace of 6.2%, according to official data, while regular pay, excluding bonuses, increased by 4.3%.
The overall pay metric shrank by 1.9% over the course of the three months compared to the headline CPI, while regular pay fell by 3.7% when inflation was taken into account.
The latter was the worst since data collection began in 2001.
Using the preferred CPI measure of the ONS, which includes housing prices, total pay fell by 0.9%, and regular pay fell by 2.8%, which is again another record-high decrease.
The job market appears to be holding up despite the dire cost-of-living pinch, with unemployment down 0.1 percentage points from the previous quarter to 3.8%.
The number of employees on payroll increased 31,000 to a new high of 29.6 million in June.
And in the three months leading up to June, vacancies remained close to their peak at little under 1.3 million.
The jobs statistics were welcomed by the chancellor, Nadhim Zahawi, who added that he is “acutely aware” of the strain on household finances.
State employees witnessed growth of 1.5% in the quarter to May, compared to 7.2% in the private sector, according to the data, which come as ministers get ready to announce a number of pay agreements for the public sector today.
To prevent inflation going out of control and prompting strike threats from unions, it is anticipated that the rises for the NHS, teachers, police, and military forces will be kept at about 5%.
By the end of the year, the CPI index of prices is expected to peak at about 11%.
The two industries with the highest growth rates were financial and business services (8.2%) and construction (8.1%), both of which were fueled by substantial incentive payouts.
Due to rising energy and fuel prices and the effects of the Ukraine crisis, bills have been rising, but many people’s salaries have been struggling to keep up.
David Freeman, director of household and labour statistics at the ONS, stated that today’s figures “continue to reveal a mixed picture for the labour market.”
While the number of persons who are neither working nor searching for work is presently declining, it is nevertheless higher than it was before to COVID-19.
“The number of people in employment remains below pre-pandemic levels.
The unemployment rate decreased once more, employment increased, and redundancies reached yet another record low due to the still-high demand for labour.
“Pay is now obviously declining in real terms, both including and excluding bonuses, as a result of recent increases in inflation.”
Since records began in 2001, real pay has decreased faster when bonuses are excluded.
Being employed is one of the finest ways for people to advance and support their families, Mr. Zahawi said.
“Today’s numbers show how strong our labour market continues to be, bringing encouragement in uncertain economic times.”
“We are helping households through cash handouts and tax cuts because we are acutely aware that rising costs are influencing how far people’s hard-earned income goes,” said the president.
“We’re working with the Bank of England to tackle inflation, giving support worth £37 billion for the cost of living this fiscal year, and investing in skills to enable people get into the workforce and advance.”
With unions already threatening strike action and resignations, two million public sector employees will receive a salary increase today that is below the rate of inflation.
Whitehall insiders claim that three to five percent settlements will be recommended by the pay review panels that cover physicians, nurses, soldiers, police, and a number of other professions.
However, this is significantly less than the 16% that nurses are asking for and what UNISON has stated its members desire.
Grant Shapps, the transport secretary, said in a series of interviews that public sector pay cannot increase with inflation since doing so could deplete savings and other workers’ salaries.
He said on LBC radio when asked about ideas that wage increases for public sector employees could be regulated at approximately 5%: “One thing we don’t want to do is allow inflation to spiral out of hand.”
When that occurs, you enter a vicious cycle where people’s incomes and savings are both depleted.
“Putin’s war in Ukraine and the significant disruption it generated, such as to fuel supplies, are to blame for the rise that is currently affecting the system.”
The plan that gets us back on track as quickly as possible is crucial, and pay raises will need to reflect that.
“It’s really important that we don’t pursue that inflation, else we’ll be permanently poorer,” the statement continued.