Stuart Gentle Publisher at Onrec

The labour market may be cooling gradually but pay growth continues to heat up

‘Pay is growing in real-terms but it will be some time before ground lost to the pay squeeze is regained’, says the CIPD

Responding to today’s ONS labour market figures, Jon Boys, senior labour market economist for the CIPD, the professional body for HR and people development, comments:  

“The labour market remains competitive, and this is clear from the record-breaking regular pay growth of 7.8%. This only resulted in real growth of 0.1% after inflation was factored in, but we can finally say that pay is growing. While this may be good news for workers, high nominal pay rises are now an established feature of the labour market and this will worry the Bank of England who will be keen to mitigate the effects of a wage-price spiral.

“Even once pay starts to rise in real terms it will be some time before the ground lost during the squeeze will be made up. Employers are uniquely well-placed to understand their employee’s financial situation, and uniquely well-placed to help. To alleviate the burden, employers can make fringe benefits work harder. Benefits such as flexible working to reduce commuting costs, childcare support and occupational sick pay can make a big difference to people's financial situation and wellbeing.

“Overall, today’s statistics show a slow easing of pressure on the labour market. Demand for workers, as evidenced by job vacancies, decreased for the thirteenth consecutive period. The supply of potential workers is increasing as unemployment edges slightly higher. Many people are leaving economically inactive categories to look for work, but evidence suggests this group are finding it harder to get into jobs. In a challenging recruitment environment, employers could do more to support these groups back into work. They include people who have taken a career break to look after family and even retirees considering returning to work.