Recent data highlights a slowdown in pay growth even as employment figures rise in the UK. The employment rate for those aged 16 to 64 years increased, while pay growth showed signs of stalling. A significant reduction in vacancies across most sectors was recorded. Despite this, earnings continue to outpace inflation. Quarterly changes in payroll figures remain minimal, reflecting overall stability.
The employment rate among individuals aged 16 to 64 in the UK reached an estimated 75% during the period from June to August 2024. This marks a notable increase compared to the previous year and a slight rise from the previous quarter, according to the latest figures from the Office for National Statistics (ONS). However, it’s important to note that while employment rates have improved, pay growth has stalled.
Recent estimates indicate a decrease of 0.1% in the number of payrolled employees, equivalent to around 35,000 individuals, between July and August 2024. In contrast, on an annual basis, the number of payrolled employees rose by 0.5%, adding approximately 165,000 individuals from August 2023 to August 2024. This suggests that while monthly figures fluctuate, overall employment growth remains positive year-on-year.
Average regular earnings, excluding bonuses, saw an annual increase of 4.9% from June to August 2024. When bonuses are included, total earnings grew by 3.8% annually. In real terms, adjusted for inflation using the Consumer Prices Index, regular pay increased by 1.9%, and total pay by 0.9% over the same period. David Freeman, head of the ONS labour market and household division, commented that this slowdown in pay growth is partly due to the impact of last year’s one-off payments to many public sector workers. Nevertheless, he highlighted that earnings are rising faster than inflation.
Despite the stability observed in payroll numbers over recent months, the labour force survey presents a varied perspective. Freeman advises caution in interpreting these data changes, as improvements in survey responses are ongoing. Vacancies, meanwhile, have decreased across most industries, yet they remain slightly above pre-pandemic levels, indicating a gradual adjustment of the job market to current economic conditions.
Overall, the UK’s labour market shows resilience with stable employment rates, despite the deceleration in pay growth and a reduction in vacancies.
