Wages grow at record pace, closing in on inflation after more than a year of pay dropping in real terms
15 August 2023, 08:38
Wages have grown at the fastest rate since records began 22 years ago.
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The average salary growth of 7.8% in the three months to June 2023 was significantly above City expectations.
The Office for National Statistics (ONS) said it was "the highest regular annual growth rate we have seen since comparable records began in 2001."
The pay increase may spark inflation anxiety in the Bank of England, whose economists are concerned about a wage-price spiral.
Staff in the private sector had pay rises of 8.2% excluding bonuses. This is the biggest growth on record, not including the pandemic period.
Meanwhile wages for workers in the public sector staff rose by 6.2%, the highest since 2001.
Regular pay rose in real terms by 0.1%, when accounting for inflation.
This is the first time since October 2021 that real wages have increased, the ONS added.
But when adjusting for Consumer Prices Index (CPI) inflation, the measure was still 0.6% down on the year. That is the smallest reduction since November 2021.
The ONS said the unemployment rate hit 4.2% during the quarter, up 0.3 percentage points from the previous three-month period.
The data shows the number of payrolled employees increased by 97,000 to 30.2 million in July, although the ONS said this is a "provisional estimate and is likely to be revised when more data are received next month".
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Chancellor Jeremy Hunt said: "Thanks to the action we've taken in the jobs market, it's great to see a record number of employees.
"Our ambitious reforms will make work pay and help even more people into work - including by expanding free childcare next year - helping to deliver on our priority to grow the economy."
ONS director of economic statistics Darren Morgan said: "The number of unemployed people has risen again while the number of people working has fallen back a little.
"This is mainly due to people taking slightly longer to find work than those who started job hunting in recent months.
"The drop in those neither working nor looking for work is mainly among those looking after their family or home.
"Meanwhile the number of people prevented from working by long-term sickness has risen again to a new record.
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"Job vacancies have now fallen over a quarter of a million since this time last year. However, they remain significantly above pre-Covid levels.
"Earnings continue to grow in cash terms, with basic pay growing at its fastest since current records began.
"Coupled with lower inflation, this means the position on people's real pay is recovering and now looks a bit better than a few months back."
