Pay growth follows inflation down as jobs market treads water 12 December 2023 Pay growth has declined markedly in recent months – tracking the sharp recent fall in inflation and a looser labour market – the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market data. The Foundation notes that while headline annual pay growth in the three months to October remained high – at 7.3 per cent for regular pay excluding bonuses – more recent data point to a sharp fall in pay growth. Looking the rise in pay over the last three months, pay growth fell to 4.2 per cent on an annualised basis, while the level of private sector pay actually fell in cash terms between September and October (though this data is volatile). Using the same measure on RTI data, typical pay growth for private sector payrolled employees fell to 2.8 per cent in November, down from 4.8 per cent in October and 6.2 per cent in September. The jobs market also showed signs of continued slow loosening, with the number of job vacancies falling for a 17th consecutive month, and the number of payrolled employees falling slightly (by 13,000) between October and November, although the latter data are provisional and are likely to be revised. Finally, the ONS says that rates of employment, unemployment and inactivity were flat in the three months to October, but these data are particularly uncertain as we await an expanded Labour Force Survey in January. Louise Murphy, Economist at the Resolution Foundation, said: “The UK’s historically high level of pay growth over the summer has been a major concern for policy makers, as it risks keeping inflation higher for longer for everyone. “But just as price pressure fell back sharply in October, so too has pay growth, as the big rises from earlier in the year fall out of the data. This will reassure Bank of England policy makers seeking to bring inflation down.”
