Employees saw monthly pay increase by an estimated 7.7 per cent in December 2022 compared to the same month of 2021. The figure stood at £2,194.
According to the Office for National Statistics (ONS), wages are up nearly 18 per cent compared to the pre-pandemic level recorded in February 2020.
It noted that average pay grew fastest in the education sector (15.7 per cent) and slowest in the transportation and storage sector (1.7 per cent) in the year to December 2022.
Real-term wages fall but base rate could rise
However, in real terms (adjusted for inflation) over the year, total and regular pay both fell by 2.6 per cent.
For Ashley Webb, UK economist at Capital Economics, the strong wage growth adds pressure on the Bank of England to raise rates from 3.5 per cent to “perhaps 4.5 per cent in the coming months”.
Webb added that the 0.5 per cent month-on-month increase in average wages may be due to higher inflation which contributed to a further increase in labour disputes in November.
“The risk is that the strikes in December may keep upward pressure on wage growth for a few months yet,” Webb said.
Number of workers grow
Meanwhile, estimates for December 2022 suggest there were 29.9 million payrolled employees – a rise of 2.3 per cent compared to the same period a year earlier. This is an increase of 676,000 people over the 12-month period. The rate stood at 75.6 per cent.
The ONS revealed that all age groups saw an increase in payrolled employess, with 83,000 aged under 25 joining the workforce.
Elsewhere, the unemployment rate has nudged up 0.2 per cent to 3.7 per cent in the three months to November, and the economic inactivity rate dipped 0.1 percentage points to 21.5 per cent, driven by those aged 16-24 and 50-64, the ONS noted.
Further, the redundancy rate has increased to 3.4 per thousand employees “but remains low”.
Discussing the findings, Danni Hewson, AJ Bell financial analyst, said: “Whilst wages are rising at near record levels, if you ignore that topsy-turvy pandemic period, people aren’t feeling the benefit. Inflation is gobbling up that extra cash and a bit more besides and it’s the cost of living crisis that’s pushing people onto picket lines.
“We’re all feeling the impact on our daily lives, but there are other factors to consider in the latest numbers. There has been a slight uptick in the number of people out of work, particularly amongst younger workers and they are likely to be amongst the most vulnerable as the economy slows and businesses start cost cutting.
