UK wages have risen at a record annual rate - 7.3% higher in the three months to May compared to the same period last year.
The wage growth figures released by the Office for National Statistics today are based on average regular pay, not bonuses. The record high rate rises follows fears that inflation could remain stubbornly high and may spark further interest rate rises by the Bank of England.
Workers have been seeking pay rises to keep with the cost of living and rising food prices.
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Rise in unemployment
Despite wage growth, unemployment jumped from 3.8% to 4% in the three months to May compared to the previous quarter, hitting pre-pandemic levels. Job vacancies dropped by 85,000 in the period from April to June to 1,034,000, the twelfth consecutive fall, suggesting the job market is slowing.
Redundancies also rose by 0.2% per thousand employees to 3.3% per thousand employees; while this is below pre-pandemic levels, it does point to a weak economy.
Taking inflation into account, real pay was down 0.8% in comparison to a rise in headline wage growth, which means wages are still struggling to keep up with inflation with UK inflation at 8.7% and the cost of borrowing at an all-time high, with interest rates at 5%.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “Somehow, pay is simultaneously too high for the Bank of England’s liking, and yet too low to keep up with inflation.
“After CPI inflation, real total pay (including bonuses) fell 1.2% and real regular pay (excluding bonuses) fell 0.8%. Wages are closing in on inflation, but we’re still poorer with each passing month.”
Retirees return to the job market
The ONS also revealed that retirees are also increasingly returning to the workforce as they face shortfall in pensions and savings.
This drove a slight increase in employment figures to 76%, up 0.2% from the previous month, but still 0.6% below pre-pandemic levels. Retirees returning to work were predominantly men taking up part-time roles, rather than full-time.
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