UK pay hit by inflation but unemployment falls to 48-year low
Soaring bonuses for City bankers and high signing-on fees for construction and IT professionals pushed average annual pay up by 7% in March, but most of Britain’s workers suffered a fifth consecutive month of falling living standards.
Without bonus payments, workers were paid an average 4.2% wage increase in the three months to March, well below the 7% inflation rate recorded in the same month, according to the Office for National Statistics.
Analysts said the UK was suffering a chronic shortage of workers after about 500,000 quit the labour market during the Covid-19 pandemic and many continental European workers quit Britain following Brexit. The unemployment rate fell to 3.7%, the lowest since 1974.
Paul Dales, the chief City economist at the consultancy Capital Economics, said: “Anecdotal evidence suggests that businesses have been raising bonuses to maintain staff, so it is probably another sign of how the tight labour market is feeding into faster wage growth.”
Illustrating the widening gap between the number of staff employers need and those seeking work or to move job, vacancies rose to a new record of 1,295,000 in the three months between February and April – an increase of 33,700 from the previous quarter and a jump of almost 500,000 since March 2020.
For the first time since records began the number of people out of work was higher than the level of vacancies after a 0.3% percentage point fall in the unemployment rate to 3.7%.
Tony Wilson, the head of the Institute for Employment Studies, said there was an urgent need for the government to support workers back into jobs.
Darren Morgan, the director of economic statistics at the ONS, said the was a rise in the number of people leaving unemployment to take up jobs and
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