Professor Len Shackleton, labour market expert at free market think tank the Institute of Economic Affairs comments on the latest ONS Labour Market statistics released today.
The latest labour market figures are a mixed bag. The main indicators such as payroll employment (which was a record high again in July), unemployment (only very marginally up), inactivity (unchanged), vacancies (still very high) and redundancies (falling and below pre-pandemic levels) all continue to paint an acceptable picture.
Productivity has increased slightly in the latest data and there has even been a welcome small increase in self-employment, which crashed during and immediately after lockdown.
The headline problem, however, is that median pay increases have failed to keep pace with accelerating inflation.
Caution always needs to be applied to published pay figures of this kind, which are statistical constructions and don't relate to the experience of any actual individuals. For example, there appears to have been an increase in the employment of young people, much of it in food and accommodation. As these workers are paid relatively poorly, an increase in their numbers relative to more highly-paid workers who are retiring or otherwise leaving the workforce can drag down median pay. Moreover, annual pay increases are measured relative to a previous period when the exit from lockdown may have distorted the data.
Some groups of workers, notably in finance and insurance, experienced much higher pay increases than the norm, while others, such as those in arts and entertainment, fared much worse.
Nevertheless the overall picture on pay is concerning, particularly as the big anticipated increases in energy prices are yet to work through. While a summer of strikes may push up pay of some highly organised workers, particularly in the public sector, this will do nothing for the vast majority of private sector workers who will be dependent on the state of demand for their particular services.
The vast majority, however, will on the evidence of today's figure at least keep their jobs for the time being. The hope must be that an imminent downturn in the economy will be a relatively job-rich recession unlike the recessions of the past.
Notes to editors
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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems, and it seeks to provide analysis in order to improve the public understanding of economics.