- Median monthly pay up 6.3% in January – 10.3% up on pre pandemic levels
- Job vacancies hit record high but new vacancy growth slows
- Pay-rolled employees up 4.8% Jan 21-22 but self-employed numbers have fallen
Danni Hewson, AJ Bell financial analyst, comments on the latest ONS earnings and employment figures:
“Andrew Bailey might have urged employers not to raise pay in a bid to keep inflation in check but when faced with record vacancy levels, even if the number of new vacancies hitting the market is slowing, employers are having to reach for the cheque book. Workers have been feeling the squeeze with the price of just about everything going up and wage growth over the three months to the end of the year is simply not keeping pace. Early indications for January suggest that’s changing as businesses battle to not only recruit workers but to keep their existing ones with the number of people hopping from job to job reaching record levels.
“Unemployment has fallen, the number of workers on payrolls is now almost half a million above pre pandemic levels but the workforce as a whole is still down by just over that number and economic inactivity levels have also jumped again over the last three months of 2021. There are a number of factors at play from a fall in the number of self-employed workers to a reluctance to return to the workforce by those in the twilight years of their lives. Concerns about Coronavirus might still be at play with older workers drifting out of employment during the pandemic and not being ready to return whilst Omicron posed a threat. With days growing longer and case numbers falling that could start to shift particularly following the government’s decision to scrap the triple lock on state pensions this year which is expected to result in real term falls in income.
“And inflationary pressure might force many, particularly low paid workers to hunt for extra income, take on additional part time roles or grab more hours in a bid to help cushion their budgets from the worst of the price increases heading down the tracks. And with hospitality seeing the biggest increase in job vacancies there is the potential for college and university workers to step into the gaps, but workers will know they have the power, and it could many employers, particularly small businesses in increasingly difficult positions.
“Because employees aren’t the only ones facing price increases. Employers are also having to pay more just to keep the lights on and for those battling back from lockdown closures the impact of wage inflation on top of all the other costs will be brutal. And here is where there is potential for things to spiral out of control. Employees demand more to cover their costs; employers have to charge more to cover theirs and prices keep heading just one way.”
