The average starting salary for jobs in the UK rose by 6.5 percent in May, marking the fastest increase in four months, according to data from hiring platform Indeed.
This rise occurred despite a significant 20 percent annual decrease in the number of job advertisements, highlighting a complex economic situation concerning inflation.
The increase in advertised starting pay outpaced the 6.0 percent rise in official wage data for the three months leading up to April, which was the smallest joint increase since September 2022.
Nonetheless, it remains twice the rate that the Bank of England considers consistent with low inflation.
Double-digit inflation impacts starting salaries
This ambiguity around the pace of pay growth continues to be a pivotal factor in the Bank of England’s decision to maintain interest rates at a 16-year high, even after headline inflation returned to the 2 percent target last month.
However, past instances of double-digit inflation mean that the rising wages have not yet fostered a widespread sense of economic well-being, which could impact Prime Minister Rishi Sunak’s standing in the upcoming election next week.
Some economists express concern that the significant number of individuals who have left the UK’s job market since the COVID-19 pandemic might pose long-term inflationary challenges.
Indeed’s data revealed that the number of unfilled jobs, a common predictor of future wage and inflation pressures, is 0.9 percent below its level just before the COVID-19 outbreak, following a 20 percent drop over the past year.
The labour market remains tight
“The UK labour market has continued its adjustment in recent months, though it remains somewhat tight and still competitive for employers in many sectors,” said Jack Kennedy, senior economist at Indeed.
The most substantial pay increases were noted in traditionally low-paid sectors such as childcare, cleaning, security work, retail, and hospitality. Workers in these areas benefited from a nearly 10 percent rise in the minimum wage in April.
Indeed also noted that the pandemic and post-Brexit changes to immigration policy have exacerbated hiring challenges for low-paid positions.
The most significant labour shortages, based on the duration jobs remained advertised, were observed in veterinary, engineering, aviation, and software roles.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
