Wage growth and job vacancies have stabilised, according to new labour market data from the Office for National Statistics.
Ahead of an interest rate decision today by the Bank of England, the figures show wage growth including bonuses at 5.8% – broadly unchanged in the three months to January.
The unemployment rate was unchanged at 4.4% at the start of the year.
Earnings in the private sector rose at a pace of 6.1%, compared with 5.3% in the public sector, the ONS said.
The latest numbers suggest that recent cooling in the labour market has eased with wage growth strengthening in recent months, despite falling interest rates and a weakening in inflationary pressures over the last year.
Liz McKeown, director of economic statistics at the ONS, said wage growth remained “relatively strong, with pay growth high in both the public and private sectors, despite the latter slowing slightly in the latest period”.
“The wider labour market picture is relatively unchanged, with the number of employees on payroll broadly flat in the latest period and with little growth seen over much of the last year,” she said.
Novo Constare, CEO and co-founder of Indeed Flex, saw the figures as a sign that UK businesses are hesitant. He said: “With major fiscal changes on the horizon, UK businesses are taking a moment to reassess their strategies.
“The labour market remains unsettled as the upcoming April hike in national insurance contributions and rise in the minimum wage looms – raising costs for employers. This change is expected to hit SMEs particularly hard, prompting many to put growth plans on hold.
“This is reflected in employment rates and job vacancies remaining relatively unchanged in this latest quarter. Businesses are feeling hesitant and uncertain, and who could blame them given everything that is going on?”
Constare added that the next major event shaping the business landscape was Rachel Reeves’ Spring Statement, which was likely to give a firmer shape to organisations’ strategies.
Chief executive of the Recruitment and Employment Confederation (REC) Neil Carberry welcomed the greater stability in the labour market, with payrolled employees and job vacancies holding steady, and the employment rate up.
However, he added: “There’s a frustrating sense of ‘what if?’ in this data though. The upcoming national insurance changes have likely dampened some hiring, adding pressure to businesses already struggling with rising costs – including those providing essential staff for public services. Today’s relatively strong pay numbers also need to be set in the context of the downward pressure on pay we will see from April as employment costs rise.
“Business and government must work together to get more people into the workforce sustainably. But that has to start with helping business to hire people on whom they are taking a chance. Welfare reform is one part of that, but so is tackling barriers to hiring people on potential. Addressing the design of the Employment Rights Bill to build firm confidence in taking a chance on someone and getting skills right with a focus on learners and their employers should both be priorities if we are to pick up pace.”
Separate pay data released yesterday by Brightmine showed the median pay award has stabilised at 3% for the third consecutive rolling quarter in February, confirming the lowest pay settlements in three years.
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