Regular pay grows by 7.2% in February to April, a record, but earnings are still lagging inflation
Reaction to this morning’s UK jobs report is flooding in.
Matthew Percival, the CBI’s Director for People and Skills policy, warns that the increase in long-term sickness (see earlier post) is concerning.
“While the number of people in work is rising and unfilled vacancies are slowly falling, the difficulties companies face when hiring is still a hard brake on growth.
Signs that stubbornly high inactivity is starting to fall are encouraging, but a new record high number of people unable to work because of long-term sickness is a real cause for concern.
Faster-than-expected wage growth points to a rate hike in June and potentially August, and is a reminder that pay pressures are likely to ease only gradually.
That doesn’t necessarily suggest the Bank of England needs to raise rates as aggressively as markets expect, but it does imply that rate cuts are some way off.
“The economic inactivity rate declined on the previous quarter to 21%, which was driven by falls to inactivity rates across all age groups. However, the number of workers inactive due to long-term sickness remains persistently elevated – reaching another record high this quarter.
“Declining inactivity saw both the employment and the unemployment rates increase on the previous quarter. As a result, the total number of employed workers has returned to pre-pandemic levels for the first time. This indicates that the labour market is gradually normalising.
“Today’s data shows that while the labour market has stabilised a little since the acute shortages of late 2021, it remains very tight by historical standards.
“It also confirms a structural shift: more people with home and caring responsibilities are working than before the pandemic, presumably because they can do so remotely, but those excluded from the labour market due to sickness is depressingly far higher.
“Our country has enormous potential. We should be leading in the industries of the future and creating good jobs across Britain, but the Tories continue to hold us back.
“Family finances are being squeezed to breaking point by a further fall in real wages, and record numbers of people are out of work due to long-term sickness.
“13 years of the Tories and all we have is a gaping hole where their plan for growth should be and a Tory mortgage penalty damaging family finances for years to come.
