The UK unemployment rate has dropped to the lowest level since January 2020 as the labour market continued to recovery from the pandemic.
However, a increase of 3.2% in wages is still not keeping up with the increase of 5.5% inn inflation meaning households will continue to be squeezed, despite an improving jobs market.
Danni Hewson, financial analyst, AJ Bell commented, “it doesn’t matter that a record number of people are now on UK payrolls or that there is still a record number of job vacancies, people in work are feeling the pinch and it’s going to get worse.”
“It’s not because wages aren’t rising, how could they not in such a tight labour market, it’s just that the cost of simply living is getting more and more expensive.”
“If inflation was hovering around the Bank of England’s 2% target, then 3.8% wage growth would be considered a pretty decent number but with prices creeping up just about everywhere it will feel to workers like their pay has taken something of a haircut.”
The Office for National Statistics reported an increase of 275,000 UK workers on payrolls between January and February, exceeding pre-pandemic levels. The total number of employed UK workers have reached 29.7m.
Chancellor Rishi Sunak said, “Thanks to the unprecedented economic support we’ve provided, we’ve now seen a year of falling unemployment and a stronger jobs market bounce back than so many predicted.”
“I am confident that our labour market is in a good position to deal with the current global challenges, with payrolled employee numbers above pre-pandemic levels in every nation and region and redundancies at record lows.”
“We know people are concerned about the rising cost of living so alongside continuing to help people find great jobs – we’re providing direct support worth more than £20 billion this financial year and next.”