• Wages grew by 3.8% in the three months to Jan 2022
• Prices shot up by 5.5% in the twelve months to Jan 2022
• Employees on payroll at record levels but employment still 580,000 below pre-pandemic levels
Danni Hewson, AJ Bell financial analyst, comments on the latest UK jobs data from the ONS:
“It doesn’t matter that a record number of people are now on UK payrolls or that there is still a record number of job vacancies, people in work are feeling the pinch and it’s going to get worse. It’s not because wages aren’t rising, how could they not in such a tight labour market, it’s just that the cost of simply living is getting more and more expensive. If inflation was hovering around the Bank of England’s 2% target, then 3.8% wage growth would be considered a pretty decent number but with prices creeping up just about everywhere it will feel to workers like their pay has taken something of a haircut.
“And it’s going to get worse, even before Russia invaded Ukraine April had been given the moniker “Awful” as households grappled with the prospect of rising NI payments, a freeze in the tax threshold, a big jump in the energy price cap and paying a little more for everything else. Now they’re also having to find a bit extra to fill up their car and company after company has been warning that anticipated hikes just won’t cut the mustard.
“But consider how things could have looked coming off the back of a series of economic shocks, restrictions, and lockdowns. Unemployment could be rising, not falling. People might still be having to cope with these rising prices whilst receiving furlough payments. Taking a look at how the jobs market has reacted since the end of furlough and more women have returned to work, part-positions have continued to recover, and the number of total hours being worked is slowly pushing up although it’s still significantly below pre-pandemic levels.
“Self-employment levels have remained subdued and the number of people classing themselves as economically inactive has continued to rise. Whilst 18–24-year-olds were disproportionately affected by the pandemic they’ve returned to the labour market in their droves with over six hundred thousand under 25’s finding themselves on payrolls in the last year. But over 50’s are telling a different story, though rising living costs and an end to Covid restrictions may change that over the coming months.”
