Workers are swimming against the tide as the gap between pay and price growth continues to squeeze pay packets

Responding to today’s ONS labour market figures, Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development, comments:  

“When it comes to the cost-of-living crisis, workers are swimming against the tide. Despite strong wages growth, prices are rising faster with the cumulative result that every month the average pay packet doesn’t go as far as it did the month before. 

“The central bank will be considering today’s labour market stats next week when it makes an interest rate decision. Some heat is coming out of the labour market as evidenced by the continued fall in vacancies which is driven by economic uncertainty, but wage growth remains strong with regular pay growing by 7.2% meaning we are odds on for another rate rise.

“The pandemic cast a long shadow over the UK labour market and only now have employment levels recovered. Record levels of inactivity due to long term sickness should be sounding alarm bells for policymakers and employers, especially in the context of labour shortages. Removing barriers to work for this group should be a priority and often this means keeping people in employment. A stronger focus on occupational health, catching conditions before they become chronic, is essential. Reform of Statutory Sick Pay should also be a priority.”