Companies have warned employees that they are demanding pay increases in the double digits. Figures show that a few lucky families are seeing their wages increase by more than 10% despite severe inflation for millions.
Official data revealed that the number of vacancies rose to a new high in January, when 1,298,400 was the highest level ever.
Companies claim that the rush for workers is forcing them into offering higher salaries. Probable indicators indicate that services workers may have witnessed their income rise 10.6 percent over the previous year.
Across the economy, average pay including bonuses was up 4.3 per cent in October-December, while regular pay was up 3.7 per cent.
Accounting for inflation – which is running near a 30-year-high – that still meant incomes fell by 0.1 per for total pay, and 0.8 per cent for regular pay.
However, the median monthly salary was 6.3% higher than last month’s. Some areas even had higher pay.
Despite the huge cost-of-living pressure on millions of households, the sharp hikes will fuel concerns about inflation becoming embedded in the economy, after the Bank of England appealed for the public to shun big increases.
The CPI price index is expected to reach 7 percent by April, when national insurance and energy bills are likely to increase.
Lee Powell, the chief executive officer of Leeds-based GMI Construction said that in certain cases, people wanted 20 percent more than what they were paid previously.
Today on BBC Radio 4 was his response. He said that while the firm had record-breaking orders, the rises in materials costs were a “bit of a headache”.
Powell stated that despite the fact that wages are rising, they were in an ideal situation.
“The market demands wage increases that are quite eye-watering in this area is very demanding.
‘We need staff and we need good staff resource… they could be wanting 10-15, in some instances 20 per cent more than what we have been used to paying out in the same position.’
He went on: ‘I can see labour prices increasing by 10 per cent easily. If you consider that the general inflation rate is currently at 5.5%, then it’s not surprising.
“There will be a significant increase in the national insurance, which could push that to 7 percent.
“Then people will also want an increase in relative pay.” It’s not surprising that people expect 10 percent, I think.
Official data showed that the average wage including went up by 4.3% in October-December while regular paid was at 3.7%
Recent payroll data revealed the differences in the economic picture between sectors.
Figures from the Office for National Statistics (ONS), underlining more pressure on labour market, show that there has been an increase in demand for workers with the number of vacancies reaching a new record at 1,298,400 for the three months ending January
Record number of vacancies: 513,700 more than the level pre-coronavirus. However, this has been slowing down.
Payrolls increased by 108,000 in January and reached a new record of 29.5million.
The unemployment rate fell by 0.2% in December’s quarter, to 4.1%.
Latest payroll numbers revealed the divergent wage picture across economic sectors.
The annual growth in education and arts was below 3% while it was in the finance, insurance, and science areas. However, this figure is well above 7%.
But those working in “other services” saw 10.6% increases over the past year.
In October and December 2018, the average pay increase for the private sector was 4.6%, while it fell to 2.6% in the public sector.
Financial and business services had the fastest rate of growth at 8.1%. This was partly due to higher bonus payments that were made in December 2021.
The overall increase in wages, including bonuses, jumped to 4.3% from 2.2% in the three-months to November. However, December’s CPI inflation reached a new high at 5.4 percent. This is almost 30 years ago.
Sam Beckett is the ONS’s head of economic statistics. He stated that “the number of payroll employees rose again in Jan 2022, and it now stands well above prepandemic levels.”
“However, the Labour Force Survey shows that overall employment is much lower than it was prior to COVID-19. Because there are fewer people who work for themselves, this is why it’s so important.
“The survey shows that the unemployment rate has dropped again, and it is only fractionally higher than before the pandemic.
However, over 400,000 people (mostly over-50s) have become disengaged and stopped looking for work.
Elle added that “After taking into account recent increases in consumer prices”, real total pay declined in the period October-2021, despite strong gains in bonuses.
Chancellor Rishi Sunak said: ‘Our £400bn economic plan has protected our jobs market through the pandemic and it is now healthier than most could have hoped for.
Our Plan for Jobs has helped to reduce redundancies and increase the number of paid employees.
‘We’re continuing to help more people into work, and are providing support for the cost of living worth over £20billion across this financial year and next.’
Martin Beck is chief economic advisor of EY Item Club. He stated that: “The most recent labour market statistics suggest that there was little to no drag from Omicron’s December activity on the job market.”
Pat McFadden, Shadow Chief Secretary to the Treasury said that these figures confirmed the fragile recovery of working people in the face of spiralling inflation and a rising cost of living.
“12 Years of Conservatives” record means that working people will pay more tax today than ever before. They also face rising heating costs, falling wages and increasing prices.
Hannah Slaughter is Senior Economist with the Resolution Foundation think tank. She said that the UK labor market defied Omicron waves and has continued to tighten. There are more jobs and vacancies, as well as job moves and increases, while unemployment continues to drop.
‘There are nascent signs that this welcome activity may be starting to feed through into stronger pay growth – though how much pay pressure remains unclear.
While some policymakers may be concerned about UK inflation rising at an accelerated rate, it is also important to consider Britain’s current real wage crisis. This circle must be completed by the UK achieving faster productivity growth.
CPI inflation’s overall rate reached 5.4% in December. It is possible that this will rise to 6.4% tomorrow, but there are still fears.
In January, the number of payrolls rose 108,000 to reach a new record 29.5 million
