AJ Bell press comment – 23 November 2022
Laura Suter, head of personal finance at AJ Bell, comments on the latest figures on whether wages are keeping pace with inflation:
“The tight labour market has helped people to get bumper pay rises this year, but there are only a handful of industries where the pay bump is big enough to counteract rising prices. The latest figures show that just one sector has seen pay consistently rise in line with inflation – Professional and Scientific – which includes lawyers, engineers, accountants, vets and scientific researchers. Staff in this sector have had an impressive run of pay growth, seeing their salaries rise by more than inflation throughout the entire pandemic and continue to outpace it so far this year.
“Big bonuses were propping up pay in the finance sector, with base salaries not being enough to keep up with inflation. However, the last few months have seen those in finance face a real-terms wage drop as pay growth dropped below inflation.
“There’s a direct link between the industries that have big staff shortages and those offering chunky pay rises. It’s inevitable that if the large number of job vacancies remains, employers will have to boost their offerings to attract more staff. While some might bump normal pay, other employers will look at boosting other benefits, whether that’s bonuses, pension contributions or softer offerings, such as working from home.
“It’s a great time to be job hunting, particularly as we head into the new year, when lots of people tend to look for new roles. It’s a buyers’ market for candidates, particularly in sectors like IT, Finance and Hospitality, where vacancy numbers are highest.
“However, not everyone is benefitting. Public sector jobs have seen some of the lowest pay growth, with sectors like public administration and education bearing the brunt of that. Arts and recreation has seen the biggest hit, seeing pay drop by almost 6% year-on-year.”
