UK wage growth outstrips US, EU
BRITISH wage growth accelerated in the three months to May, in contrast to a downward trend in advertised salaries in the United States and the eurozone, according to figures from recruitment website Indeed released on Thursday (Jun 8).
The data contrasts with other numbers which show a cooling in Britain’s labour market, and may concern Bank of England policymakers who fear Britain could suffer a more persistent inflation problem than other major economies.
“Central bank policymakers have made it clear that wage growth slowing down to levels more in line with historic norms will be one of the criteria used to decide when to readjust monetary policies and stop raising interest rates,” Indeed said.
While markets expect the US Federal Reserve to pause its rate-hiking cycle next week, the Bank of England is forecast to raise rates for a 13th consecutive meeting on June 22, and most likely take the rate to 5.5 per cent by November from 4.5 per cent now.
Indeed said advertised salaries in Britain in the three months to the end of May were 7.2 per cent higher than a year earlier, the fastest growth in data that goes back to early 2019.
By contrast, growth in advertised salaries in the United States slowed to 5.3 per cent, after outstripping British wage growth throughout 2022, while in the eurozone it edged down to 4.7 per cent.
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Among big eurozone countries, salary growth was fastest in Germany at 6.2 per cent, and weakest in Italy at just 1.6 per cent. Pay growth remained on an upward trend in Spain and the Netherlands.
The rise in advertised salaries in Britain was greatest in nursing and low-paid roles such as retail, hospitality and cleaning. This likely reflected a 9.7 per cent rise in the minimum wage in April and a government pay deal with nurses worth about 5 per cent, Indeed said.
Britain saw a similar decline in the number of job vacancies relative to the number of people unemployed as in the United States and the eurozone, potentially pointing towards downward pressure on wages ahead.
Wage growth in Britain is still well below consumer price inflation, which was 8.7 per cent in April, and in double digits for seven months before that.
Other data have shown more of a softening in the labour market. Britain’s Recruitment and Employment Confederation reported the weakest growth in starting salaries since April 2021 earlier on Thursday.
The most recent official data showed annual wage growth excluding bonuses for all employees – not just new starters – at 6.7 per cent in the first quarter of 2023. REUTERS
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