Wages rise but fail to keep up with soaring prices as Britain’s economy flatlines

ITV News Business and Economics Editor Joel Hills reports on the newly released data that shows wage growth surging to near-record levels as signs point to a cooling jobs market

Regular pay has been growing at the fastest rate seen outside of the Covid pandemic, but wages are still failing to keep up with rising prices, official figures indicate.

Regular pay growth was 6.7% between October and December 2022, the Office for National Statistics said.

But wages continued to be outstripped by soaring prices, falling by 2.5% once inflation was taken into account.

The figures also showed the UK’s unemployment rate has remained unchanged despite Britain’s economy flatlining, with 843,000 days lost to strike action in December - the highest since 2011.

The rate of UK unemployment was 3.7% in the three months to December, the same rate that was recorded in the three months to November. However, it had edged higher than the previous calendar quarter, with the unemployment rate standing at 3.6% in the three months to September.

As ITV News Business and Economics Editor Joel Hills notes, the data also showed that the gap between private and public sector pay continued, with average regular pay growth for the private sector at 7.3% in October to December 2022, and 4.2% for the public sector.

And the estimated number of vacancies fell by 76,000, which the ONS said reflects economic pressures and uncertainty still leading firms to hold back on recruitment. There were signs of a wave of people returning to the workplace amid the cost-of-living crisis as the data showed a record high net flow of people moving from economic inactivity and into employment.

Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), said: “The last quarter of 2022 saw fewer people remaining outside the labour market altogether, with some moving straight back into a job and others starting to seek work again. “This meant that although employment rose again, unemployment edged up also. “Although there is still a large gap between earnings growth in the public and private sectors, this narrowed slightly in the latest period. Overall pay, though, continues to be outstripped by rising prices.”

Responding to the newly released data, Chancellor Jeremy Hunt said: “In tough times unemployment remaining close to record lows is an encouraging sign of resilience in our labour market. “The best thing we can do to make people’s wages go further is stick to our plan to halve inflation this year.”

Labour’s shadow chancellor Rachel Reeves said: “Britain has huge potential – but 13 years of the Tories has left real wages down, families worse off, and our economy lagging behind on the global stage. “The government needs to stop sitting back and following this path of managed decline.”

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