Recent data reveals a complex landscape for the UK labour market.
- The employment rate for individuals aged 16 to 64 rose to 75%.
- Despite increased employment, pay growth has noticeably decelerated.
- Average regular earnings grew by 4.9%, while total earnings, including bonuses, increased by 3.8%.
- Vacancy rates have decreased but remain above pre-pandemic levels.
Recent findings from the Office for National Statistics (ONS) indicate a significant shift in the UK’s labour market dynamics. The employment rate for people aged 16 to 64 has increased to an estimated 75%, reflecting both an annual rise and a quarter-on-quarter improvement. However, accompanying this positive trend is a marked slowdown in pay growth.
While the number of payrolled employees saw a modest decrease of 0.1% (equivalent to 35,000 individuals) from July to August 2024, there was a substantial 0.5% increase, totalling 165,000 employees, when comparing August 2023 to August 2024. This suggests a complex interplay between employment and wage trends.
Analysing earnings, the ONS reported that the annual growth in average regular pay (excluding bonuses) was 4.9% from June to August 2024. In comparison, total earnings growth, inclusive of bonuses, stood at 3.8% for the same period. Significantly, real-term pay growth, adjusted for inflation using the Consumer Prices Index, was 1.9% for regular pay and 0.9% for total pay.
David Freeman, head of the ONS labour market and household division, noted the impact of last year’s one-off public sector payments on current pay growth figures. He highlighted that despite the slowdown, earnings continue to outpace inflation. Freeman also advised caution in interpreting labour force survey data due to ongoing efforts to enhance survey accuracy.
Additionally, vacancy rates have experienced a decline across most industries, though they still remain slightly above pre-pandemic levels. This decline in job vacancies points to a possible shift in employers’ hiring strategies, potentially influenced by economic uncertainties and adjustments in demand for skilled labour.
The UK’s labour market presents a mixed picture, with rising employment contrasting with decelerating pay growth.
