TL:DR – Number of employed people in UK falls again as wage growth slows
- UK employment declined by 184,000 in December, mainly affecting retail and hospitality.
- Unemployment rate held steady at 5.1%.
- Private sector wage growth slowed to 4.5%, the lowest in five years.
- Employers are hesitant to hire due to increased national insurance and minimum wage.
- Job vacancies have dropped below pre-COVID levels, with 1.8 million unemployed.
- Economists anticipate Bank of England will reduce interest rates amid a weakening job market.
UK Employment Declines Amid Slow Wage Growth
The UK labour market continues to face challenges, with a drop of 184,000 employees in December compared to the previous year, particularly in the retail and hospitality sectors, while private sector wage growth hits a five-year low.
Current payroll figures stand at 30.2 million, translating to an unemployment rate of 5.1%.
People are getting paid less
Recent data from the Office for National Statistics (ONS) reveals a decline in the workforce and stagnation in hiring, particularly in shops, restaurants, and hotels.
Wage growth, excluding bonuses, decreased to 4.5%, down from 4.6%, while including bonuses, it fell to 4.7% from 4.8%.
This decline is reflected nationally, impacting businesses across the UK, particularly those reliant on consumer footfall in the retail and hospitality industries.
Stakeholders – What will Rachel Reeves do about it?
Chancellor Rachel Reeves has faced criticism for contributing to uncertainty among employers ahead of her budget announcement, which included £26 billion in tax increases aimed at addressing cost-of-living issues.
Liz McKeown, director of economic statistics at the ONS, highlighted the concentrated job losses in retail and hospitality.
The response from economists and industry leaders has been one of concern as the labour market deteriorates, with ongoing uncertainty impacting hiring practices.
There are predictions that large corporations may become even more cautious about hiring, particularly for entry-level positions.
What Will Happen Next
Analysts anticipate potential cuts to interest rates by the Bank of England, as expectations shift in response to worsening employment conditions.
The outlook remains uncertain as businesses navigate these economic pressures, with the potential for further consequences in the job market.