UK Jobs Decline: Wage Growth Hits 5-Year Low

The number of employed people in the UK has fallen again, particularly in shops, restaurants and hotels, reflecting weak hiring, while private sector wages grew at the slowest rate in five years, official figures show. Figures from the Office for National Statistics (ONS) showed the number of employees on payrolls fell by 184,000 in December compared with a year earlier, to 30.2 million. The rate of unemployment remained at 5.1% in the three months to the end of November. The chancellor, Rachel Reeves, has been criticised for creating uncertainty for employers in the run-up to her budget in late November, announcing £26bn of tax-raising measures in an effort to cut the cost of living and plugging a shortfall in the public finances. Wage growth excluding bonuses weakened to 4.5% in the quarter from 4.6% while including bonuses, it slipped to 4.7% from 4.8%, the ONS said. Liz McKeown, the director of economic statistics at the ONS, said: “The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity. “Wage growth in the private sector has slowed to its lowest rate in five years, while public sector wage growth remains elevated reflecting the continued impact of some pay rises being awarded earlier than they were last year.” City economists had expected the unemployment rate to remain at 5.1% and average wages, excluding bonuses, to slip from 4.6% in the three months to the end of October to 4.5% over the same period to the end of November. The labour market has weakened significantly over the last year. Unemployment has jumped to 1.8 million, and the number of vacancies have fallen to below the average seen before the Covid pandemic. Employers have become more reluctant to retain staff and advertise for new workers after Reeves pushed up employers’ national insurance and the minimum wage last year. Donald’s Trump’s “liberation day” tariffs last April added to uncertainty in the global economy, dampening the appetite among large corporations for investment. The boom in artificial intelligence has created jobs in the tech sector and sent stock markets soaring to record highs, but made some employers re-examine their hiring policies, with more organisations becoming reluctant to hire school leavers and graduates for entry-level white-collar jobs.