Latest data from the ONS shows more evidence of cracks in the jobs market, along with only a slight increase in pay rises
It is getting harder to find work amid a fall vacancies (Image: GETTY)
Millions of workers have been warned real terms pay cuts are “extremely likely” over the coming months.
Latest data from the Office for National Statistics revealed average pay in the private sector rose 2.9% in the three months to July, largely in line with inflation.
However, all eyes will be on separate figures from the ONS on Wednesday which will show if inflation has picked-up more recently on the back of an oil price hike as a result of escalating tensions in the Middle East.
Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK said: “With inflation also at 2.9% in July and set to rise higher over the rest of the year, a real terms pay cut for private sector workers looks extremely likely.”
Pay rises in the public sector average 6.3%, although this is impacted by timings of awards, the ONS explained. TUC General Secretary Paul Nowak said: “The labour market picture remains finely balanced. Jobs and pay remain under pressure.”
The ONS data also showed the UK’s jobless rate remained at 4.9% in July – but the number of vacancies continues to fall. The estimated number of workers in payrolled jobs fell by 101,000 in the year to July, and was down 19,000 between June and July, the ONS reported. Vacancies also continued to fall, down another 8,000 to 702,000.
ONS Director of Economic Statistics Liz McKeown said: “The labour market remains broadly stable, with employment and unemployment rates largely unchanged in the latest period. However, payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors.
“Vacancies remain at their lowest level outside the pandemic period for more than a decade, with smaller businesses continuing to report that increased labour costs are affecting hiring decisions.
“Regular wage growth has remained relatively stable in recent months, while total pay growth, which includes bonuses, has eased and was last lower nearly six years ago. There remains a notable difference between public and private sector pay growth, with public sector figures continuing to be affected by the timing of NHS pay awards this year.”
The ONS data also revealed a slump of 62,000 retail jobs in the past year. Trade body the British Retail Consortium said the number was down 122,000 on two years ago, and 410,000 fewer than a decade ago.
Helen Dickinson, BRC chief executive, said: “Entry-level retail jobs are vanishing at the very moment they are needed most. With one in seven young people now not in education, employment or training, the loss of 122,000 jobs in the last two years means tens of thousands fewer opportunities for young people to get their first step on the career ladder, build skills and earn a living.”
Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said: “Today’s figures show that the labour market is continuing to soften. The IoD’s own data paints a similar picture, showing that more business leaders expect to reduce headcount over the coming year than increase it.
“While a subdued economic outlook and weak business confidence are important factors, employers are also grappling with a series of policy changes that have increased the cost and risk of hiring.”
