Job vacancies hit another record high, while UK wage growth continued to lag behind the high cost of living between October and December, according to the latest figures from the Office for National Statistics (ONS).
Employees’ regular pay, excluding bonuses, grew by 3.7% between October and December from a year earlier. However, the rising cost of food, energy and household goods has pushed inflation up by 5.4% in the 12 months to December. This means that real wages fell by 0.8%.
Employers are having to increase salaries to attract the skills they need, as they face a continuing shortage of workers.
The number of job vacancies between November and January hit another record of 1.3 million.
British Chambers of Commerce Head of Economics, Suren Thiru, said: “The increase in payroll employment in January suggests that Omicron had little effect on the UK labour market as demand for workers remained robust.
“While it is encouraging that payroll employment is rising and unemployment continues to fall, the strong headline figures mask significant underlying challenges.
“Record vacancies underscores the critical hiring crisis facing firms. With high economic inactivity indicating that many people have left the jobs market altogether, chronic staff shortages are likely to weigh on the UK economy for a sustained period.
“With regular pay growth slowing, inflation is comfortably outpacing wages, weakening household finances further. Despite recruitment difficulties, the damage being done to business cashflow from a myriad of cost pressures are limiting the extent to which wages can rise.
“While Omicron is having little impact on employment, the squeeze on firms’ finances from high inflation, soaring energy bills and the looming national insurance hike is likely to weaken job creation and further restrain pay growth in the coming months.
“The government must do more to help people access rapid retraining opportunities for in-demand jobs, including helping older workers to pivot to more sustainable jobs. Delaying the looming National Insurance rise would give firms the financial headroom to retain and recruit people.”
Further detail on the ONS Labour market data can be found here.