The latest analysis shows that the average worker’s weekly income has only increased by £3.80 compared to a year ago, largely due to a surge in living expenses canceling out wage growth. The Resolution Foundation highlighted this trend, coinciding with a rise in the UK’s unemployment rate to 5.1% outside the Covid pandemic peak in 2016, as reported by the Office for National Statistics.
Concerns arose as employers restrained hiring activities before the recent Budget, compounded by a national insurance hike affecting workforce demand. Despite this, a stabilization in job vacancies suggests potential for increased hiring. While wage growth has decelerated, it still manages to slightly outpace inflation.
Real wage growth, factoring in inflation, saw a modest 0.5% uptick in the three months leading to October, according to the ONS. Over the past year, average real earnings rose by a mere £3.80, barely enough to cover a cup of coffee, according to the Resolution Foundation. Notably, many workers continue to feel the repercussions of the 2008 financial crisis, enduring a prolonged period of wage stagnation.
Younger workers faced challenges in a tough job market environment, with a notable increase in unemployment among those aged 18 to 24. The ONS director highlighted the ongoing weakening of the labor market, with a decline in payroll numbers, an uptick in unemployment, and stagnant job vacancies, especially affecting younger age groups.
TUC General Secretary Paul Nowak stressed the importance of stimulating demand to bolster the economy, advocating for a further interest rate cut by the Bank of England. With unemployment rising and wage growth slowing, attention must be on supporting those out of work during the economic slowdown.