As vacancies continue to decline, wage growth has slowed slightly.

According to official statistics on the labour market, wage growth has continued to decline in the three-month period ending September. However, it is not falling as quickly as expected.

According to the Office for National Statistics, the UK’s pay growth, excluding bonuses, was 4.8% for the three-month period ending September. This is slightly lower than the 4.9% for the rolling quarter prior. Some economists expected the figure to have been 4.7%.

Average wages including bonuses rose by 4.3%, compared to the previous three-month period (3.9%).

The employment rate remained largely unchanged in the year from July to September of 2024 at 74.8%. However, unemployment rose to 4.3%. Economic inactivity dropped to 21.8%.

The number of vacancies has fallen to its lowest point since May 2021. It is down 35,000 over the quarter, to 831,000 for the three-month period ending in October.

Liz McKeown, ONS Director of Economic Statistics, stated: “Growth was again slowed this month, to its lowest level in more than two years.” The growth in pay, including bonuses, increased. However, for the last few periods this figure has been impacted by one-off payments to public sector employees made last year.

Ben Harrison, director at Lancaster University’s Work Foundation, stated: “While employment is stable, it masks the fact that key indicators like vacancies, wages, and long-term illness are in reverse.

The number of vacancies has decreased for 28 consecutive months, but remains 35,000 higher than pre-pandemic level. We could see further cooling in the job market due to recent increases to employer national security contributions and minimum wage.

Growing concern

Matthew Percival said, “The labour markets continue to split, with signs that employers are reducing their hiring intentions at the same as they welcome a fall in inactivity. The figures are in stark contrast to the growing concern over spiraling employment costs, which will increase after the increase of National Insurance Contributions (NICs) last month, the Employment Rights Bill, and the latest increase in National Living Wage.

In the months to come, the government will need to work closely with the business community to make sure that these costs can be managed. If margins are squeezed to the limit, businesses lose the ability to grow and many are forced to make difficult choices between cutting jobs or investing.

Neil Carberry, chief executive of the Recruitment and Employment Confederation, said that today’s labour statistics confirmed the cooling trend in pay and vacancies as suggested by business surveys. The Bank of England was right to cut rates for a while, as the pressure on wages has eased.

“Seek growth means also boosting investment in business.” The Budget and Employment Rights Bill will cause many businesses to feel the pain of large increases in their employment costs. “Growth is the key to making changes affordable. That’s why businesses will look for real change in industrial strategy, public sector reform, and skills.”

How to deal with trouble

Stephen Evans, CEO of the Learning and Work Institute said, “Another troubling increase means that there are now over 1.2 million 16-24 year olds who do not have a job or attend full-time school. Since over two years, the employment rate for 18-24 year-olds who are not in full-time school has fallen.

This is a recipe for disaster and could have long-term effects on their careers and the economy. The Get Britain Working White Paper must explain how the Youth Guarantee will work so that all young people can be offered a training or apprenticeship place, job or an employment.

Harrison said: “If the UK is to achieve its 80% target, it must address the high rates of long-term illness that keep too many people off the job market.” Since May-July 20,23, over 2.7 millions people in the UK have been unable to work due to long-term illness.

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