The latest analysis shows that the average worker’s weekly income has only increased by £3.80 compared to a year ago. Rising living costs have nearly offset any gains from higher wages, according to the Resolution Foundation. Unemployment in the UK has reached 5.1%, the highest level since 2016, as reported by the Office for National Statistics (ONS) for the three months up to October.
Employers held back on hiring due to uncertainties around the recent Budget, and a national insurance increase also dampened the demand for workers. However, the decrease in job vacancies seems to have stabilized, indicating a potential resurgence in hiring. Despite slower wage growth, average salaries are still managing to keep up with the cost of living.
After adjusting for inflation, wages only rose by 0.5% in the three months leading to October, the ONS revealed. The Resolution Foundation emphasized that over the past year, real earnings have only increased by £3.80, which is barely enough to cover the cost of a cup of coffee. The legacy of the 2008 financial crisis continues to impact many workers, with a prolonged period of stagnant wages.
Experts noted that wage growth, excluding inflation, slowed down to 4.6% in the same period, prompting discussions on potential interest rate cuts by the Bank of England. The number of employees on payrolls decreased by 38,000 in November, the largest drop in five years, further indicating a weakened job market.
Younger workers are particularly struggling to find employment, with an 85,000 increase in unemployment among those aged 18 to 24 in the three months leading up to October, the largest rise since November 2022. The ONS director highlighted the ongoing trend of a deteriorating labor market, with fewer job opportunities and an increase in the unemployment rate, especially among younger age groups.
TUC General Secretary Paul Nowak emphasized the need to boost demand to stimulate job market recovery, calling for additional interest rate cuts by the Bank of England. Addressing the challenges faced by those out of work is crucial amidst the lasting effects of recent economic slowdowns.