Workers walk in the rain across London Bridge, with Tower Bridge seen behind, in London. — Reuters
LONDON: Wage growth for the lowest-paid workers is starting to slow as a worsening jobs market undercuts the bargaining power of a section of the workforce that has proved resistant to the Bank of England’s inflation-fighting efforts, new data shows.
Advertised salaries for low-wage roles rose by 5.9% in the year to October, down from a seven-month high of 6.6% in the previous month, according to figures from job-search site Indeed. It marked the first moderation since April.
It came as a separate report from the Recruitment and Employment Confederation added to evidence that the labour market continued to weaken before Labour’s tax-raising budget on Nov 26.
It showed the number of active vacancies declined 11.2% in November on a monthly basis, with hiring for Christmas jobs – like delivery drivers or postal workers – down on last year’s levels.
The findings bolster the case for a widely anticipated rate cut from the central bank this week.
Governor Andrew Bailey is expected to side with those on the Monetary Policy Committee (MPC) who are more worried about a softening labour market than the threat to inflation from sticky price pressures.
The figures suggest pay in sectors such as retail and hospitality, which rely heavily on low-paid workers, is now coming under pressure from the big payroll-tax hike that hit companies in April and a sombre economic outlook.
Such jobs had proved an outlier. Boosted by increases to the minimum wage, pay growth hit around 8% last year even as it slowed for high and middle-paid positions and vacancies across the labour market declined.
Deteriorating wage prospects are also pushing more workers to look for new jobs.
Recruitment firms Hays said 62% workers want to change roles over the next year due to career dissatisfaction, the largest share since 2016.
“Easing wage growth for low-paid occupations reflects the softening in demand that we see in job postings, albeit with a bit of a lag, and I would expect the gradual easing to continue in the next few months,” said Jack Kennedy, senior economist at Indeed Hiring Lab.
He added that wages for middle- and high-paid postings will likely continue to ease, “making life a bit easier for the MPC with regard to rate cuts next year.” — Bloomberg
