Official figures released on Tuesday showed workers in the UK saw a record decline in real earnings in the past quarter despite rising wages amid soaring inflation.
According to the Office for National Statistics (ONS), regular salaries (excluding bonuses) from April to June are estimated to have increased by 4.7% compared to the same quarter last year.
But after adjusting for inflation, regular salaries plunged 3% year-on-year, the biggest drop since records began in 2001.
Gross salaries (including bonuses) increased by 5.1% from April to June, but when inflation is taken into account, the effective decrease is 2.5%. This is the largest decline in real gross wages since the three-month period from February to April 2009.
UK inflation hit a 40-year record of 9.4% in June and is expected to peak at around 11% later this year.
The employment rate from April to June was stable compared to the previous quarter, and the total number of workers increased.
The employment rate for those aged 16 to 64 in the fourth quarter fell by 0.1 percentage points from the previous quarter (January to March) to 75.5%, while the unemployment rate increased by 0.1 percentage points to 3.8%.
However, the number of employed persons aged 16 and over increased by 160,000 during the quarter.
The number of employees hired continued to grow, reaching a record high of 29.7 million in July, according to preliminary ONS estimates.
The number of self-employed people remains low but has increased slightly.
Job openings fell for the first time since June-August 2020, but are still at record levels.
The layoffs rate was down 0.6% from the previous quarter and down 1.9% from the three months before the COVID-19 pandemic.
Statistician: No cause for alarm yet
Jamie Jenkins, former head of health and labor market analytics at the ONS, said there was nothing alarming about the labor market right now, but that could change if inflation continues.
Since July, unions have staged more than a dozen strikes in sectors such as railroads, postal services, telecommunications and law, demanding wage increases to combat inflation.
Jenkins told The Epoch Times that it would be difficult for companies hit by rising wage costs to raise workers’ wages because they would have to pass the costs on to consumers.
The UK economy was estimated to have contracted by 0.1% in the second quarter, but Jenkins said the country has yet to see something like “the doom and gloom of a recession hitting the entire labor market.” said.
“Apart from wages, labor market indicators overall are doing pretty well,” Jenkins said.
“Wages are rising, but inflation is so high it’s hard to keep up. But I don’t think there’s anything alarming about the labor market statistics,” he added.
Jenkins said embedded inflation, driven largely by higher energy prices, could be a concern.
“We know that at least 20% of households do not have the money to pay for these bills, which are expected to rise over the fall and winter. It could fall,” Jenkin said, adding that this could lead to a “labor market reversal” next spring.
In an emailed statement to The Epoch Times, Jane Gratton, head of human resources policy at the British Empire Chamber of Commerce (BCC), called unfilled vacancies a “time bomb” for companies, calling them “skills and labor shortages have reached a crisis point.Many companies.”
Gratton has urged the government to include more jobs in the missing occupations list so that foreign workers can fill the gap while companies train and upskill their workforce. She also called for encouraging economically inactive people to enter the labor market.
Asked if there were enough workers in the UK to fill the vacancies, Jenkins said that while the skills mismatch was part of the challenge, he believed “there are a lot of people in the country”. Stated.
“One of the things that has happened in the UK over the last 25 years is that more people have gone to university. I didn’t,” he said. “And the labor market is evolving and changing. If you think about the kind of jobs that were being done in the UK 30 years ago, things are different. [from] what we have now. ”
Governments and employment groups need to look at these issues in the short term, Jenkins said, and immigrants could also play a part, although they could put downward pressure on wages.