Senior Economist at the Resolution Foundation, focusing on employment, young people and health | views my own
Louise Murphy
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Finally, we shouldn’t forget that pay remains historically very weak. Average real weekly pay is only around £30 above its pre-financial crisis peak – and around £276 below where it would be if the pre-crisis growth in pay had continued.
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Thread from myself from @juliadelldiniz.bsky.social.
Vacancies have also fallen, and are well below their pre-pandemic level. In the three months to May, the vacancy rate was 2.2%, compared to the 2019 average of 2.7%.
This morning’s data shows a weak labour market: unemployment remains high and real wages are barely growing.
The monthly LFS unemployment data is volatile but the big picture is that unemployment has been climbing for the past few years and stood at 4.9% in the three months to April.
Louise Murphy
Not all countries have seen this rise in unemployment.
The UK still has a relatively low unemployment rate compared to our neighbours, but our performance is slipping. Our unemployment rate used to be well below the OECD average, but has crept up to almost reach it (4.9% vs 5.0%).
This recent weak real pay growth partly reflects slowing nominal earnings growth. The 12-month annual growth measure of regular pay growth now sits at 2.9% – just below the Bank of England’s sustainable rate. This weakens the case for rate rises from the Bank.
Turning to pay, and today’s stats show a mixed picture. With inflation holding steady yesterday, headline real regular pay growth remained barely positive – just 0.1% in the three months to April.
The weakness in the labour market also seems to be showing up in the forms of employment people are doing.
The latest Workforce Jobs data shows a huge rise in self-employment in the last few months, while growth in employment among people on zero-hours contracts has outpaced overall employment.
Payrolled jobs also look weak. The big fall seen in last month’s flash estimate was not revised away, with employment falling by 65,000 between Feb and April.
This month's flash estimate for May does look more promising, with employment holding steady between April and May.
But this broader picture masks a sharper squeeze in the private sector. Real regular pay in the private sector has been falling since last October. And with inflation expected to rise over the summer, workers should brace for a further squeeze in the coming months.
