In the UK, pay has seen its quickest increase in over three years, mainly due to robust wage growth in the private sector. According to the Office for National Statistics (ONS), pay rose by 3.4% between September and November compared to the same period last year, adjusted for inflation.
Private sector earnings outpaced public sector jobs in growth. Despite concerns about higher wages potentially driving inflation up, the Bank of England is expected to lower interest rates next month, with traders betting on a cut to 4.5% from the current 4.75%.
The Bank closely monitors pay and employment data when deciding on interest rates. In November, average weekly earnings in the UK reached £660, with inflation at 2.5% compared to the previous 2.6%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, noted the substantial gap between pay and inflation, stating, "It's leaving us with more money at the end of the month."
Ashley Webb, UK economist at Capital Economics, mentioned concerns about private sector pay growth but predicted a rate cut in February. The unemployment rate in the UK rose to 4.4%, with job vacancies decreasing.
Petra Tagg from Manpower UK mentioned high pay rates in sectors requiring specialized skills like engineering, IT, and artificial intelligence. However, she highlighted that people are hesitant to change jobs in the current uncertain job market.
With concerns about rising costs impacting businesses, Chancellor Rachel Reeves introduced tax rises, affecting National Insurance rates and employer thresholds. Despite warnings from businesses about reduced cash flow, the labor market has not shown significant signs of decline.
Liz Kendall, the Work and Pensions Secretary, emphasized the need to enhance employment opportunities, focusing on improving living standards and economic growth through Jobcentre reforms and ensuring young individuals have employment or educational prospects.