British private sector wage growth is accelerating

Britain’s private sector wage growth accelerated in the three months to October as inflation rose to double digits, according to data amid growing bitterness between ministers and unions.

According to the announcement of the National Statistics Office on Tuesday, outside of the epidemic period, the private sector had the highest annual regular weekly earnings growth of 6.9 percent without bonuses – although the employees’ salaries decreased significantly in real terms, as consumer prices rose even faster.

According to the ONS, the standard of living of public sector workers took a much bigger hit, with their earnings rising by just 2.7 per cent over the same period, one of the biggest differences between the private and public sectors.

The numbers confirm the concerns of the Bank of England, which is expected to raise interest rates again on Thursday, that the tight labor market is driving wage growth to a level that is incompatible with the 2 percent inflation target. But they also show that this is almost entirely due to private sector wage agreements. The government has argued that it cannot improve public sector pay offers for fear of further stoking inflation.

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Reacting to the figures, Chancellor Jeremy Hunt said the government’s plans would “help to more than halve inflation next year” but that “hard decisions will be needed now”, adding: “Any action that risks embedding high prices in the economic situation it just prolongs everyone’s pain.”

Ministers have refused to open pay talks with unions representing nurses and other public sector workers ahead of a series of pre-Christmas strikes that will disrupt travel, health care and other services. An attempt to avert a strike by nurses ended in failure on Monday. Pat Cullen, general secretary of the Royal College of Nursing, complained that ministers had “abandoned” any debate on the fundamental issue and that members were “not getting an extra penny”.

Neil Carberry, chief executive of the Confederation of Recruitment and Employment, said: “Given the scale of the dispute in the public sector and industries where government plays a key role, the growing gap between private and public pay needs to be addressed. opportunity for negotiation.”

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Data on Tuesday showed that the deteriorating economic outlook is beginning to affect the labor market, with job vacancies falling for the fifth consecutive quarter and the unemployment rate rising 0.1 percentage point to 3.7 percent from the previous quarter.

Yael Selfin, an economist at KPMG, said the data showed that “expectations of lower turnover are putting less pressure on employers to recruit while workers are becoming more cautious about moving jobs.”

However, the unemployment rate remained close to record lows, with one job remaining for every unemployed job seeker. In addition, the increase in unemployment is partly due to people previously out of the labor market looking for work again – a development that will be welcomed by policymakers after rising economic inactivity has increased wage pressures.

The ONS said the economic inactivity rate fell by 0.2 percentage points quarter-on-quarter to 21.5 per cent as 50-64-year-olds who previously described themselves as retired began to return to the workforce.

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The employment rate increased by 0.2 percentage points compared to the quarter to 75.6 percent, although it was still below the pre-epidemic level.