Inflation trumps earnings growth

Inflation continues to trump overall earnings growth, despite seemingly favourable labour market conditions.

Average weekly earnings rose by 4.9% in the year to December (the highest rate since August) including a big boost in bonus pay.

Excluding bonus payments, regular earnings grew by 3.7%.

At that level, earnings were trailing consumer price inflation (CPI) and fell around three percentage points behind Retail Prices Index (RPI) inflation, the preferred measure of union negotiators.

However, alternative payroll data from the HMRC tax authority pointed to a higher increase in median monthly pay over the year to January (6.3%).

Vacancies continued to climb, to 1,298,400 (513,700 more than before the pandemic). But the rate of growth was slowing.

Job-to-job moves reached record numbers in October to December 2021 driven by resignations.

The overall number of employees on the payroll continued to climb, reaching 29.5 million.

That contributed to a small quarterly increase in the employment rate to 75.5%, and a decrease in the unemployment rate to 4.1%. However, the self-employed workforce has still not recovered.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/earningsandemploymentfrompayasyouearnrealtimeinformationuk/february2022

https://www.ons.gov.uk/economy/inflationandpriceindices