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Wages across the UK are lagging behind inflation, as the cost of living squeeze hit households at the end of last year, even as vacancies hit record levels.
The latest UK labour force statistics, just released, show that earnings failed to keep up with rising prices in the last quarter of 2021.
Basic pay rose by 3.7% per year in the October-December, while total pay (including bonuses) grew by 4.3% — up from 4.2% a month ago.
That means that real pay packets fell, once you adjust for inflation over the quarter.
However, the wages figures – especially for total pay, are higher than City economists expected.
The Office for National Statistics explains:
In real terms (adjusted for inflation), total and regular pay fell on the year at negative 0.1% for total pay and negative 0.8% for regular pay.
Previous months’ strong growth rates were affected upwards by base and compositional effects. These temporary factors have largely worked their way out of the latest growth rates, however, a small amount of base effect for certain sectors may still be present.
UK inflation hit 5.4% in the 12 months to December, and is expected to climb above 7% by April before easing off. That will leave households facing the worst squeeze on their disposable incomes for at least 30 years, the Bank of England warned earlier this month.
The jobs report also shows that the UK unemployment remained at 4.1%, the same as a month ago, in the first three months covering the end of the furlough scheme. That’s a drop of 0.2% on the previous quarter.
The number of job vacancies in November 2021 to January 2022 rose to a new record of 1,298,400, an increase of 513,700 from its pre-coronavirus January to March 2020 level.
However, the rate of growth in vacancies continued to slow down, the ONS says.
It also estimates that the number of payrolled employees rose again, by 108,000 in January, to a record 29.5 million.
But, the number of people in employment remains below pre-pandemic levels.
We’ll have more details and reaction to the jobs report shortly.
Elsewhere, European stock markets are expected to open lower, after fears of a Russian invasion of Ukraine hit shares yesterday. German chancellor Olaf Scholz is travelling to Moscow today to meet Vladimir Putin in a bid to avert war.
- 7am GMT: UK labour force report
- 10am GMT: Eurozone GDP report for Q4 (second estimate)
- 10am GMT: ZEW index of German economic sentiment
- 1.30pm GMT: US producer price inflation index for January