UK pay growth accelerated at the end of last year, bringing relief to workers and a headache for the Bank of England.
The latest employment data shows that total pay rose by 6% per year in the October-December quarter – up from 4.4% in July-September, and a little faster than City economists expected.
Regular pay (excluding bonuses) rose by 5.9% in the October-December quarter, down from 4.9% in the previous three months.
These increases mean earnings continued to rise faster than inflation, meaning real wages rose. Adjusted for the CPI inflation rate, both real regular and total pay rose by 3.4% on the year.
That is likely to cause some concerns at the Bank – it cut interest rates earlier this month but some policymakers remain worried that inflationary pressures are still bubbling.
The UK employment rate for people aged 16 to 64 years was estimated at 74.9% in October to December 2024. This is above estimates of a year ago, and up in the latest quarter.
The UK unemployment rate for people aged 16 years and over was estimated at 4.4% in October to December 2024. This is above estimates of a year ago, and up in the latest quarter.
The UK economic inactivity rate for people aged 16 to 64 years was estimated at 21.5% in October to December 2024. This is below estimates of a year ago, and down in the latest quarter.
Firms are continuing to cut back on vacancies, today’s jobs report shows, as the surge in job opportunities after Covid-19 lockdowns ended fades.
Today’s jobs report also shows that employment and unemployment rose in the quarter, while the number of people out of the labour market (economically inactive) dipped.
There were an estimated 819,000 vacancies in the UK in November 2024 to January 2025; a decrease of 9,000, or 1.1%, from August to October 2024.
Today’s jobs report should give an insight into how the UK labour market fared after Rachel Reeves’s budget in October.
Many businesses have been concerned about the chancellor’s decision to lift employers’ national insurance contributions – which could raise £22bn in extra tax – arguing it will lead to job cuts.
But today’s data estimates that the number of payrolled employees in January increased by 21,000, meaning there were 49,000 more people on company payrolls than a year ago.
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