Shortage of skilled staff helps raise pay but wage growth still lags behind inflation, official figures show
The pressure on employers to find skilled staff appeared to push up wages by more than expected in November as UK job vacancies reached a new peak.
City economists had expected the uncertainty surrounding the Brexit talks to limit wage rises, excluding bonuses, to 2.3%, the same rate as in October, but they increased to 2.4% in the three months to November. The figure rose to 2.5% when bonuses were included.
Vacancies hit the highest level since comparable records began in 2001, up 60,000 on a year earlier at 810,000.
Further indications that the labour market remained in rude health could be found in figures for the total number of people in employment, which hit 32.2 million, the highest on record.
The Office for National Statistics also said the employment rate, which measures the proportion of 16- to 64-year-olds in work, reached 75.3%, a figure that was higher than for a year earlier and the joint highest since comparable records began in 1971.
On Friday the ONS will publish its first estimate of GDP growth covering the last three months of 2017 and it is likely to show that the buoyant jobs market has helped the UK achieve at least 0.4% growth.
Some economists said the Bank of England could react to the expectation that wages growth would jump to between 3% and 4% in 2019 by increasing interest rates several times this year.
But pay growth continued to lag behind November’s inflation rate of 3.1%, indicating that Britain’s workforce still lacks the bargaining power to prevent living standards slipping.
Chris Williamson, chief business economist at IHS Markit, said the figures showed the UK labour market displayed signs of strength late last year, with employment rising and pay growth “creeping higher”.
He said: “The data corroborates business survey evidence which indicated that the economy maintained a solid pace of expansion towards the end of 2017. Pay growth nevertheless continues to run below inflation, squeezing consumer spending power and dampening households’ views on their financial wellbeing in January. Under such conditions, it seems likely that the recent disappointing consumer spending trend will persist into 2018, restraining economic growth.”
Debbie Abrahams, Labour’s shadow work and pensions secretary, said that despite the small increase in wage growth millions of people remain trapped in low pay and insecure work “while the cost of basic essentials soars”.
She said: “These figures mask both regional inequalities and the employment gap faced by women, disabled people and BAME groups, who have too often borne the brunt of austerity cuts.”
A measure of wages that uses one month’s figures, and not the three-month rolling measure preferred by the ONS, shows that the growth in total wages including bonuses declined in November and October compared with September.
The month-on-month figures are notoriously volatile, but they indicate that despite rising vacancy rates, employers are not using higher wages as a recruitment tool.
Frances O’Grady, the TUC general secretary, said: “The government must raise the minimum wage to £10 as quickly as possible. And hardworking teachers, midwives and other public servants must get a proper pay rise after years of artificial pay restrictions.”
Most of the increase in employment came from a rise in full-time employment at the expense of self-employment. The ONS said 2017 marked a turning point in self-employment, which had risen every year since 2000, as employers sought to put workers on full-time contracts. Self-employment fell slightly to 4.77 million.
However, the rise in job recruitment since the summer has not been fuelled by the private sector. In the period from June to September, much of the rise in employment came from a increase in hiring by the public sector and in particular a recruitment drive by the National Health Service.
Sourced from The Guardian online. Written by P Inman.