UK wage growth witnessed a rise in December, and unemployment levels maintained their stability, contradicting business concerns that Chancellor Rachel Reeves‘s autumn budget could result in job cuts.
According to the Office for National Statistics, the annual increase in average total weekly earnings climbed by 6% over the three months leading up to December, a rise from 5.6% in November and surpassing the predictions of 5.9% by City analysts.
Excluding bonuses, regular pay growth also saw an increase from 5.6% to 5.9%, aligning with forecasts. The unemployment rate held steady at 4.4%, defying predictions of a slight rise to 4.5%.
Liz McKeown, the ONS Director of Economic Statistics, noted that pay growth, excluding bonuses, rose for the third consecutive period, with improvements observed across both private and public sectors.
After adjusting for inflation, there was a slight increase in real pay growth.
Employment levels on payrolls remained largely unchanged in the final quarter, continuing a pattern of decelerating growth. Although the rate of decline in job vacancies slowed, the total number still marginally exceeded pre-pandemic figures.
In light of Reeves’s proposed £25 billion hike in employers’ national insurance contributions and a 6.7% increase in the minimum wage from April, business leaders have voiced concerns about potential job reductions.
Surveys among employers indicate plans for significant layoffs, the largest in a decade, as companies prepare for the upcoming fiscal changes in April. This preparation comes at a time when business confidence is waning.
Earlier in the month, the Bank of England revised its growth forecasts for the UK economy downwards and anticipated additional pressures on households due to rising inflation, leading to a reduction in interest rates from 4.75% to 4.5%.
The ONS has expressed concerns over the quality of UK employment data, suggesting that decision-making may be impaired by inaccuracies in official statistics.
Liz Kendall, the Work and Pensions Secretary, emphasized the sustained growth in wages since July, which has been crucial in enhancing household incomes and improving living standards.
However, she also highlighted that too many individuals remain excluded from employment opportunities, particularly the sick and disabled, underscoring the need for increased support rather than marginalization.
