Wage growth has picked up pace in spite of “warning lights” flashing over the wider jobs market as fears grow about the impact of Labour’s Budget measures, while unemployment in Wales has further increased to stand well above the 海角视频 average,
Official figures revealed that average regular pay surged again, to 5.6% in the three months to November, which is the highest since last May and up from 5.2% in the previous three months, driven by growth in the private sector.
Wages are also outstripping inflation at the fastest pace since August 2021, up by 3.4% when taking the Consumer Prices Index into account, according to the Office for National Statistics (ONS).
The figures lay bare the wage cost pressures already facing businesses and come amid warnings over a pull-back in hiring as moves announced by Chancellor Rachel Reeves in last October’s Budget will send staff pay bills surging even higher.
The British Chambers of Commerce (BCC) cautioned there were already “warning lights” on the jobs market as the latest figures showed unemployment rising, vacancies falling and the biggest drop in payrolled workers since the height of the pandemic.
Experts said the Bank of England was still likely to cut interest rates next month as worries over the weakening jobs sector would outweigh strong wage growth.
The ONS said the rate of 海角视频 unemployment increased to 4.4% in the three months to November, up from 4.3% in the three months to October. It rose 0.4% on June to August, 2024.
In Wales the unemployment rate was up on the previous quarter by 0.7% to 5.6% of adults of working age. Of the 海角视频’s nations and regions, the level is only higher in London, at 6.2%. The actual number of people unemployed in Wales increased 12,000 to 85,000.
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Wales also has the lowest employment rate (70%) of any 海角视频 nation or region. For the 海角视频 as a whole employment was at 74.8%. While marginally down on the quarter the number of people not seeking employment and classed as economic inactive in Wales, was 25.6%, compared to a 海角视频 average of 21.6%. The rate is only higher in Northern Ireland at 26.1%. The actual number of economic inactive in Wales is 496,000, down 9,000 on the quarter.
Welsh Conservative Shadow Economy Minister, Samuel Kurtz MS said:“These figures are a damning indictment of Labour failures at both ends of the M4. It’s clear that these key economic indicators are heading in the wrong direction, with every lost job representing a livelihood on hold and the dignity of work deprived.
“The Welsh Labour Government has broken Wales’ economy after 26 years of mismanagement. Welsh Conservatives will bring forward the plan that will fix Wales’ economy, focussing on skills and lifting artificial burdens off the backs of businesses.”
In a further sign of job market woes, the ONS said vacancies for the 海角视频 dropped by another 24,000 in the three months to December, to 812,000.
The ONS cautioned the latest payroll estimation, drawn from tax data, was subject to change, while the unemployment rate is still seen as unreliable due to changes to the jobs survey, but experts said the figures show a flagging jobs market overall.
It comes ahead of Labour’s move to hike national insurance contributions for employers and the minimum wage, both in April.
Jane Gratton, deputy director of public policy at the BCC, said: “The labour market continues to be challenging for many businesses, with wage growth continuing to rise as firms compete for skilled workers. This is a concern as they face a significant rise in employment costs in April.”
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She added: “The full impact of the changes to national insurance and the minimum wage, announced at the Budget, won’t be fully seen until later in the year.
“However, the warning lights on recruitment, employment and training are already flashing.”
The ONS data showed that regular private sector pay growth jumped to 6% in the three months to November, its highest rate since February last year.
Pay growth is being watched carefully by the Bank for signs of stubborn inflation, but a surprise fall in CPI last month, to 2.5% from 2.6% in November, is seen as smoothing the path for a February rate cut, from 4.75% to 4.5%.
Robert Wood, an economist at Pantheon Macroeconomics, said: “Employment dropped in December as firms put hiring on hold, and the downtrend in payrolls has worsened over the past few months showing Chancellor Rachel Reeves’s tax-hiking budget along with surging uncertainty after Mr Trump’s election have weighed on growth.”
But with inflation forecast to rise back up to 3%, the Bank faces a difficult dilemma.
Matt Swannell at the EY Item Club said: “Recent messaging from the Monetary Policy Committee (MPC) suggests it is becoming more concerned about the weakness of employment.
“So though pay growth remains resilient, the EY Item Club still expects the MPC to lower Bank Rate by 25 basis points in February.”