UK Average Earnings, Job Vacancies, and PAYE Real Time Data- Sector Response

Yesterday (17th October) ONS released data on Average weekly earnings in Great Britain, Vacancies and jobs in the UK and Earnings and employment from Pay As You Earn Real Time Information.

Experimental monthly estimates of payrolled employees and their pay from HM Revenue and Customs’ (HMRC’s) Pay As You Earn (PAYE) Real Time Information (RTI) data. This is a joint release between HMRC and the Office for National Statistics (ONS).

Main points

• Early estimates for September 2023 indicate that the number of payrolled employees rose by 1.2% compared with September 2022, a rise of 369,000 employees; the number of payrolled employees was up by 3.8% since February 2020, a rise of 1,102,000.
• Payrolled employment stayed the same in September 2023 when compared with August 2023 decreasing slightly by 11,000 employees (0%); this should be treated as a provisional estimate and is likely to be revised when more data are received next month.
• UK payrolled employee growth for August 2023 compared with July 2023 has been revised from a decrease of 1,000 reported in the last bulletin to a decrease of 8,000, because of the incorporation of additional real time information (RTI) submissions into the statistics, which takes place every publication and reduces the need for imputation.
• Early estimates for September 2023 indicate that median monthly pay increased by 5.7% compared with September 2022, and increased by 21.7% when compared with February 2020.
• For Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, annual growth in payrolled employees in September 2023 was the highest in Luton, with a rise of 3.8%, and was lowest in Camden and City of London, with a fall of 2.1%.
• The increase in payrolled employees between September 2022 and September 2023 was largest in the health and social work sector, a rise of 182,000 employees, and smallest in the administrative and support services sector, with a fall of 29,000.
• Annual growth in median pay for employees in September 2023 was highest in the transportation and storage sector, with an increase of 13.5%, and lowest in the health and social work sector, with a decrease of 0.3%; This decline in median pay growth for the health and social work sector is partly because of comparing against high lump-sum payments made in September 2022.

Read the full report here.

The Chancellor of Exchequer, Jeremy Hunt said:    

“It’s good news that inflation is falling and real wages are growing, so people have more money in their pockets. To keep this progress, we must stick to our plan to halve inflation.”

Resolution Foundation- UK Labor Market Cools, Raising Questions About Pay Recovery Duration

Further labour market cooling leaves big question over how long Britain’s mini pay recovery will last.

Continuing fall in employment and vacancy levels mean that a big question going into the autumn is how long Britain’s mini pay recovery will last, the Resolution Foundation said yesterday (Tuesday).

The latest pay, vacancies and employee jobs data from the ONS – crucial data on employment, unemployment and inactivity will be published next Tuesday – showed further evidence of labour market cooling.

The number of employee jobs fell slightly over the summer (down 13,000 between June and August), and the number of vacancies fell for the 15^th consecutive month to 988,000 (though they remain above pre-pandemic levels).

The big question is how much this cooling will feed into future pay growth. Headline annual pay growth remains strong – regular average weekly earnings grew by 7.8 per cent in the three months to August, compared to the same time last year, and by 1.1 per cent in real terms.

However, there are signs that pay growth may already be starting to cool. Monthly private sector pay growth has fallen to 0.4 per cent in each of the past three months – down from an average of 0.9 per cent in the previous four – and that pay is actually falling in the more recent RTI data.

The Foundation adds that the wider labour market data due next week will be needed for policy makers to make a firmer judgement on the state of the labour market, and what that means for the future path of interest rates. The quality of this data will be crucial.

Hannah Slaughter, Senior Economist at the Resolution Foundation, said:

“Following yet another painful squeeze in recent years, pay packets have staged a mini recovery this year. But with the labour market continuing to cool, the big question going into this autumn is how long this recovery will last.

“Employment and vacancy levels continued to fall over the summer, while the pace of private sector pay growth has slowed.

“Fast falling inflation should help to prop up real pay packets even as the labour market cools down, and monetary policy makers face a tough judgement on the future path of interest rates.”

Sector Response

Ben Harrison, Director of the Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK:

“Today’s ONS figures suggest total pay growth remains at historically high levels but that doesn’t paint the full picture. One-off bonuses within the public sector linked to new pay deals and cost of living payments mean that total pay in the public sector has risen by a record 12.5% from June to August 2023.

“But ultimately the data suggests that with inflation still above six per cent, workers’ real wages have only grown by 1.1% on the year, and many in lower paying sectors like construction and retail are likely to have seen no growth at all.

“While vacancies remain above pre-pandemic levels at 998,000, today’s data indicates a 15^th consecutive fall, with 14 of 18 industry sectors showing a reduction in hiring.

“With temperatures plummeting and cost of living pressures still high, it is welcome the Chancellor has announced the National Living Wage will rise for over two million low-paid workers in April. But further talk from the Prime Minister and Chancellor of tougher benefit sanctions will only heighten anxiety amongst people in low paid and insecure work who are already on the edge of employment.  

“While we await further labour market data this month, it is likely vacancies will continue to drop as the labour market slows amidst economic uncertainty and the Chancellor must use his upcoming Autumn Statement to provide additional support to workers, job seekers and employers.”

Jack Kennedy, Senior Economist at the global hiring and matching platform, Indeed, commented:

“Wages have risen the most in real terms in nearly two years, delivering workers a much needed boost after a prolonged period of erosion. With inflation continuing to fall back, real wages grew by 1.1% y/y, the strongest since late-2021. 

Overall, regular pay growth remained close to a record high in the three months to August at 7.8% year-over-year, ticking down from 7.9% in the previous period. Public sector regular wage growth hit a record high at 6.8% y/y, though it trails the private sector, which recorded 8.0%. One-off NHS bonuses following the recent pay deal drove public sector wages including bonuses up by a record 12.5%. 

Wage growth remains a crucial metric for the Bank of England in assessing the persistence of domestically-generated inflation and hence prospects for interest rates. 

While the strength of wage growth means policymakers need to remain vigilant, more recent data from the Indeed Wage Tracker offers them hope that pay pressures may be starting to cool. Growth of advertised pay for new hires eased in September on both the single-month and three-monthly measures (7.3% y/y to 7.1% on 3m measure and 7.3% to 6.9% on single-month). 

Wage growth remains high in a number of categories though, led by childcare (10.5% y/y), cleaning (9.1%) and care (8.4%). It’s well down from peaks though in categories including driving, construction and tech. 

Meanwhile, the ONS figures show labour demand continues to gradually fall back from last year’s peaks. Vacancies fell for the fifteenth consecutive period in the three months to September to 988,000 and are down 24% from their peak. That continued rebalancing of the labour market should take some of the heat off wage growth in coming months.”

Responding to today’s (Tuesday) labour market figures, TUC General Secretary Paul Nowak said:

“The UK economy remains in a perilous position.

“This is the third month in a row that PAYE employment has fallen with vacancies also continuing to decline.

“And while average pay has finally crept above inflation – real wages are still shrinking across the public sector, retail, hospitality and construction.

“Let’s not forget – If pay packets had been growing at pre-crisis levels, workers would be on average nearly £15,000 better off.

“So for millions there will be little relief from the cost of living crisis and many will be rightly worried about their job prospects.

“The Conservatives’ economic mismanagement is costing this country dear. Britain is stagnating under their watch.”