The latest Office for National Statistics (ONS) labour market figures reveal a glimmer of hope for workers as positive real wage growth provides an opportunity to regain some of the purchasing power lost during periods of high inflation.
Despite a cooling labour market marked by rising unemployment and falling employment rates, the uptick in real regular pay growth to 1.9% brings a sense of relief, unseen since the post-pandemic recovery period two and a half years ago.
Jon Boys, Senior Labour Market Economist at the CIPD, notes the shift in labour market dynamics, with indicators such as a decline in vacancies and an increase in the redundancy rate pointing towards a slowdown in recruitment and retention pressures. This easing could potentially prompt the Bank of England to consider an earlier base rate cut. However, amidst these changes, the sustained positive real wage growth offers a silver lining for workers grappling with the impact of inflation on their purchasing power.
Addressing Inactivity and Health Concerns
The rise in inactivity rates, particularly among the long-term sick, raises concerns about workforce participation and health management. While a tight labour market has historically driven efforts to boost labour supply, the focus on inactivity should not wane.
“Employers can make reasonable adjustments and invest in occupational health,” Jon Boys adds. “Not only to facilitate people who are inactive back into work, but to future-proof their workforces by helping people to stay in work. Approximately half of people of working age with a long-term health condition are still in work, showing that appropriate measures can help both individuals and organisations be resilient.”
