Wages Keeping Pace with Inflation
Wages have kept pace with inflation for the first time in over a year according to the latest data published by the Office for National Statistics (ONS). It is good news for workers, but experts are warning that the cost of living crisis continues to take its toll.
The ONS data reveals that wages grew by 7.8% in the three months leading up to July 2023, despite unemployment rising while hiring slowed down.
Experts Welcome Rise of Wages
The Chief Executive of the Recruitment and Employment Confederation (REC), Neil Carberry, welcomed the rising wages and explained: “Pay rising to meet falling inflation is a function of firms giving higher pay awards to staff in the spring, ongoing staff shortages in some sectors such as hospitality and logistics, and a big rise in the minimum wage.”
The Global Managing Director of recruitment agency Aspire, Terry Payne, also welcomed the good news but also warned that workers were still being financially stretched. In an interview with HR Magazine, Payne said: “Make no mistake, wages keeping pace with rising costs is a long overdue and welcome development. But the fact is, most people aren’t feeling the financial benefits just yet. Costs have soared in recent years and many are still struggling to make ends meet.”
An Aspire report from August this year revealed over 63% of UK workers were not currently able to save money. This ongoing financial stretching could negatively affect retention, with Payne adding: “The knock-on effect of high costs of living is people searching for higher paying jobs to boost their income. And while the number of vacancies, overall, is falling slightly, there is still the best part of a million job opportunities in the UK.”
Vacancies Fall while Unemployment Rises
The period between June and August saw the estimated number of vacancies fall by 64,000 on the quarter to 989,000. Meanwhile the unemployment rate for May to July increased by 0.5 percentage points on the quarter to 4.3%.
Economic inactivity also increased, primarily because of students and people suffering with long-term illness. Between April and June, 2.6 million people needed time away from work due to chronic illness, which is a rise of 449,000 since the Covid-19 pandemic began in January 2020.
This persistent high level of long-term sickness is highlighting the need for better occupational health. This is according to the Senior Labour Market Economist for the Chartered Institute of Personnel and Development, Jon Boys, who said: “Rising sickness is becoming a persistent theme in the post-pandemic UK population, with record levels of people recorded as inactive due to long-term sickness. The rise in inactivity is a symptom and the rise in sickness is the cause.”
Boys believes that both policymakers and employers should be focusing on occupational health to prevent people falling out of work in the first place. “Employers must also take note of the effects of stress at work,” added Boys.
“This entails good job design and managing workloads effectively.”
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