Wage growth is slowing and the unemployment rate rising, according to the latest figures from the Office for National Statistics (ONS).
The annual rate of pay growth in the three months between March and May slowed to 5%, while the unemployment rate rose to 4.7%, its highest in four years.
The ONS data shows the number of people on PAYE payroll has fallen in seven of the eight months since Chancellor Rachel Reeves announced the rise in National Insurance contributions.
Jane Gratton, Deputy Director Public Policy at the British Chambers of Commerce (BCC), said: “The ONS data suggests that the jobs market is continuing to loosen as unemployment rises, vacancies fall again, and wage growth slows. However, pay rises are still outpacing inflation, and employment costs pressure is continuing to erode firms’ operating margins.
“The steep increases in national insurance and the national living wage loom large over this data. Our research shows that recruitment remains challenging, and businesses cite labour costs as the biggest pressure.
“Firms will also be wary of plans announced this week for a review of pension auto-enrolment contributions which could lead to further cost burdens. This mounting financial pressure, alongside pervasive skills shortages, remains a massive challenge for business, presenting big risks to investment and productivity.
“The £5bn cost associated with the employment rights bill also poses a further threat to firms’ investment plans. Without further amendment, the legislation will add even more to employers’ costs.
“The BCC’s Blueprint for Growth sets out a series of practical policy proposals to address these issues. Improving apprenticeships and tackling workplace health investment are crucial to help restore balance in the labour market.
“Firms also want to see real-world progress on the government’s economic strategies, movement on global trade talks and no further tax rises on them to restore business confidence.”
More details on the ONS data can be found here.
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