UK wages continue to grow, as unemployment rises to highest level for nearly a year
14 May 2024, 07:49
Unemployment has risen to its highest level for nearly a year, while wages continue to rise above inflation, according to the latest figures.
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The rate of UK unemployment rose to 4.3% in the three months to March, up slightly from 4.2% in the previous quarter.
That makes the unemployment rate the highest since May to July last year.
Meanwhile, regular average earnings growth remained unchanged at 6% in the three months to March, outpacing Consumer Prices Index (CPI) inflation by 2.4% - the highest since the three months to August 2021.
But this may prove unhelpful for the Bank of England in its battle to bring down inflation.
The Bank is watching wages closely as it looks to bring CPI back to its 2% target. Slowing growth in wages is seen as being key to paving the way for it to cut interest rates.
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Most economists were expecting earnings growth to fall to 5.9%.
Jeremy Hunt, the chancellor, said: “This is the 10th month in a row that wages have risen faster than inflation which will help with the cost of living pressures on families.”
Liz McKeown, ONS director of economic statistics, said: "We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.
"At the same time the steady decline in the number of job vacancies has continued for a 22nd consecutive month, although numbers remain above pre-pandemic levels."
"Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years," she added.
Ben Harrison, director of the of the Work Foundation at Lancaster University, said that the recovery may be better on paper than in reality.
“Nominal wage growth remains historically strong at 6%," he said. "The impact of energy and food inflation on income has waned, and workers are seeing a 1.9% real pay rise on the year.
"However, the UK’s ten-month wage recovery may slow in the coming months as inflation levels off and with only 30% of British firms planning above inflation pay rises in 2024.
"While many employees may be better off compared to last year, most workers will be feeling poorer than in previous decades."
