Pay growth slows but still outpaces rising prices

Pay growth slows but still outpaces rising prices
A person prepares coffee in a hospitality environmentGetty Images

Wage growth slowed again in the British jobs market but is still outpacing price rises, official figures show.

Pay, excluding bonuses, grew by 6.2% in the last three months of 2023 compared with the same period a year before, according to the Office for National Statistics (ONS).

After taking price rises into account, pay went up by 1.9%.

But the statistics watchdog has said it could not guarantee the reliability of jobs market data.

The Office for Statistics Regulation suspended its Labour Force Survey in the autumn because of falling response rates. Its fully updated survey will not be in place until September.

The governor of the Bank of England, Andrew Bailey, has said that the ONS figures are the Bank’s only way to gauge unemployment, so their current unreliability is “posing challenges” as policymakers weigh up what to do about interest rates in the coming months.

As higher interest rates have hit business and household finances, pay growth has been slowing from the highs seen last summer and the number of job vacancies has been falling too.

According to the latest figures, the number of vacancies fell for the 19th time in a row, down 26,000 to 932,000 in the three months to January.

However, there were some signs that the downward trend in job vacancies could be slowing.

The latest unemployment figures also suggest that the jobs market remains fairly resilient.

The unemployment rate across the UK fell to 3.8% in the final three months of 2023, down from 3.9% in the three months to November. It marked the lowest level seen since the November 2022 to January 2023 period.

Chancellor Jeremy Hunt said: “It’s good news that real wages are on the up for the sixth month in a row and unemployment remains low, but the job isn’t done.

“Our tax cuts are part of a plan to get people back to work so we can grow the economy – but we must stick with it.”


By David Ryckman