Regular wages (excluding bonuses) grew by 7.8% between May and July 2023, according to the latest data from the Office for National Statistics (ONS).
The figure is the same as that of the previous three-month period, which marked the highest annual growth rate since comparable records began in 2001.
Annual growth in employees’ average total pay (including bonuses) for May to July was 8.5% (up from 8.2% for the previous three-month period). The ONS noted that this total growth rate was bolstered by one-off NHS and civil service bonus payments made in June and July.
In May to July 2023, annual pay growth in real terms (adjusted for inflation) rose 0.6% for regular pay and 1.2% for total pay.
ONS director of economic statistics Darren Morgan said: “Earnings in cash terms continue to increase at a record rate outside the pandemic-affected period. Coupled with lower inflation, this means people’s real pay is no longer falling.”
Annual average regular pay growth for the public sector was 6.6% in May to July, representing the highest regular annual growth rate since comparable records began in 2001. For the private sector the rate was 8.1% – one of the largest annual growth rates seen outside of the pandemic period, the ONS said.
The finance and business services sector saw the largest annual regular growth rate at 9.5%, followed by the manufacturing sector at 8.1%.
Responding to the figures, Jon Boys, senior labour market economist for the CIPD, said: “Although headline regular pay stayed at a record high of 7.8%, those who dig below the headlines will find a different story in the alternative pay data in the form of PAYE estimates from HMRC. These timelier estimates suggest nominal pay may have peaked in June.”
According to John Pearce, executive vice president at CloudPay, the continued spike in pay remains a challenge for employers facing skills shortages and growing budgetary pressures.
“In fact,” he said, “latest statistics from recruitment firm Robert Half revealed that pay confidence in the UK workforce has increased significantly and entered positive territory for the first time since Q1 2022. This will only serve to further drive wage inflation that is not sustainable for businesses that are themselves facing uncertain times.”
Pearce added that employers need to look at ways they can provide more for employees with “breaking the bank”.
He said: “The answer arguably lies in more modern benefits packages that include access to support that will help workers and employers alike. Financial education is a prime example. As living costs remain high, people are in need of access to impactful advice to help manage their wages in an increasingly complex landscape.”
The latest ONS bulletin also showed the number of vacancies in June to August 2023 was 989,000, down 64,000 on the previous three months. The figure is also down by 268,000 from a year ago, although 188,000 above pre-pandemic levels. Unemployment rose to 4.3%, up from 4.2% in the previous three-month period.
Boys of CIPD commented: “Overall, there are now fewer vacancies and more people unemployed, particularly among students and the long-term sick. Rising sickness is becoming a persistent theme in the post-pandemic UK population, with record levels of people recorded as inactive due to long-term sickness.”
He added: “This highlights the important interplay of health and employment policy. Both policymakers and employers should have a bigger focus on occupational health to stop people falling out of work in the first place. Employers must also take note of the effects of stress at work. This entails good job design and managing workloads effectively.”