Rising bonuses for city bankers and high hiring rates for construction and IT professionals raised Britons’ average annual salary by 7% in March, but most workers suffered a fifth straight month of falling living standards.
Without bonus payments, workers received an average salary increase of 4.2% in the three months to March, well below the 7% inflation rate recorded in the same month, according to the Office of National Statistics.
Analysts said the UK was experiencing a chronic shortage of workers after around 500,000 left the workforce during the Covid-19 pandemic and many workers from mainland Europe left the UK after Brexit. The unemployment rate dropped to 3.7%, the lowest since 1974.
Paul Dales, City chief economist at consultancy Capital Economics, said: “Anecdotal evidence suggests companies are raising bonuses to keep staff, so it’s likely another sign of how the tight labor market is fueling faster wage growth. ”.
Illustrating the widening gap between the number of employees employers need and those looking for work or changing jobs, vacancies rose to a record 1,295,000 in the three months between February and April – an increase of 33,700 from the previous quarter. and a jump of nearly 500,000 since March 2020.
For the first time since records began, the number of unemployed people was above the vacancy level following a 0.3% percentage point drop in the unemployment rate to 3.7%.
Tony Wilson, head of the Employment Studies Institute, said there is an urgent need for the government to support workers back into jobs.
Darren Morgan, director of economic statistics at the ONS, said there was an increase in the number of people leaving unemployment to work and many people leaving the labor market returning to look for work, but it fell short of the number of people employers needed. .
About 83,000 workers returned to the workforce in March, up from 10,000 in February and a consensus forecast by city economists for an increase of just 5,000.
“Since the beginning of the pandemic, about half a million more people have completely disconnected from the job market,” Morgan said. “However, job openings are still rising, hitting yet another record.
“Indeed, with the latest drop in unemployment, to the lowest rate since 1974, there were fewer people out of work than job openings for the first time since records began.
“Continued strong bonuses in some sectors such as construction and especially finance mean total payout continues to grow faster than prices on average, but underlying regular earnings are now falling sharply in real terms.”
Responding to the latest figures, Chancellor Rishi Sunak said: “I understand that these are anxious times for people, but it is reassuring that fewer people are unemployed than previously feared, and we are helping them keep more of their jobs. hard-earned money through tax cuts, changes to universal credit and support with household accounts worth £22bn this financial year.”