UK Labour Market Saw Sharp Growth in December Despite Omicron, but Surging Inflation Outstrips Pay Rises

The UK’s labour market experienced sharp growth in December despite a surge in COVID-19 cases linked to the Omicron variant and the British government implementing “Plan B” restrictions, data from the Office for National Statistics showed on Tuesday.

Employers added a record 184,000 staff to their payrolls in December, up 409,000 on the February 2020 level before the pandemic, bringing the total to 29.5 million employees in the UK.

“Our latest Labour Force Survey estimates for September to November 2021 show a continuing recovery in the labour market, with a quarterly increase in the employment rate, while the unemployment rate decreased,” ONS said.

Meanwhile, the unemployment dropped by 0.4 percentage points for the three months to the end of November to 4.1 percent, close to the 4 percent level seen in the last pre-pandemic quarter.

The number of job vacancies in October to December also rose to a new record of 1,247,000, an increase of 462,000 from the pre-pandemic January to March 2020 level, with the majority of industries displaying record numbers of vacancies, ONS said.

However, the rate of growth in vacancies continued to slump, with the ratio of job vacancies to every 100 employee jobs reaching 4.1 percent in October to December, a record high.

While the employment figures look promising, pay for British workers fell for the first time since July 2020 as fears grow about surging inflation, levels of which reached a 10-year high of 5.1 percent in November.

The ONS said that although average total earnings, including bonuses, grew at an annual rate of 4.2 percent in November, and growth in regular pay, excluding bonuses, was 3.8 percent among employees in September to November 2021, the impact of sky-high inflation levels meant most employees weren’t any more in pocket.

Single-month growth in real average weekly earnings for November suffered the first drop since July 2020, at -0.9 percent for total pay and -1.0 percent for regular pay, meaning workers suffered a cut to their pay packets.

Commenting on the latest employment figures, Frances O’Grady, the general secretary of the Trades Union Congress said in a statement: “While it’s good to see employment continuing to rise, on pay it’s the same story of a squeeze on workers.

“Working people deserve a decent standard of living and a wage they can raise a family on. But instead, following the worse pay squeeze for two centuries, real pay is falling, and they now face a cost-of-living crisis.”

O’Grady called on the UK government to urgently increase pay packets across the country, adding that if it fails to do so, families could soon find themselves having to choose between paying for their soaring bills or putting food on the table.

“Ministers must give unions more power to go into workplaces and negotiate better pay and conditions, give our public sector workers a decent pay rise, and get the minimum wage up to £10 an hour immediately,” O’Grady said.

But British finance minister Rishi Sunak praised the latest figures as “proof that the jobs market is thriving.”

“From traineeships for young people to sector-based work academies for those switching careers, our plan for jobs is continuing to create opportunity for all,” he said.