Wage Rises Slow as Retail and Hospitality Jobs Continue to Fall

Published: 12 August. The English Chronicle Desk

New data from the Office for National Statistics (ONS) reveal a continued slowdown in wage growth across the UK, with retail and hospitality sectors facing persistent job losses. Average weekly earnings rose by 4.6% in the three months to June, down from 5% in the previous period, while pay excluding bonuses maintained a 5% growth rate. Despite these increases, the overall picture suggests growing challenges in the labour market.

The number of employees on payrolls has declined in ten of the last twelve months, with the steepest falls concentrated in hospitality and retail. Employers in these industries are grappling with rising costs, including higher minimum wages and increased national insurance contributions, which have led to reduced hiring and job cuts.

Liz McKeown, director of economic statistics at the ONS, highlighted the continued fall in job vacancies, marking the 37th consecutive period of decline. This downward trend affected 16 of the 18 industry sectors surveyed, with employers reporting hesitation to recruit or replace departing workers. Unemployment held steady at 4.7% in June, unchanged from May, though ONS officials urge caution in interpreting these figures due to data collection challenges.

Looking ahead, experts anticipate further wage growth moderation and a rise in redundancies. Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, warned that “wage growth is likely to weaken over the course of the year as softening economic conditions, rising redundancies and elevated staffing costs increasingly hinder pay settlements.” He also forecast a moderate increase in unemployment, fueled in part by looming tax rises expected in the upcoming autumn budget.

The slowing wage growth, however, presents a complex scenario for the Bank of England. Although wages are still rising faster than inflation, which could exert upward pressure on prices, the evidence of a weakening labour market offers justification for recent monetary easing. Investors currently expect one further interest rate cut later this year, likely in December, reflecting cautious optimism amid economic uncertainties.

As the UK navigates these challenges, the interplay between wage dynamics, employment trends, and inflation will remain critical in shaping economic policy in the months ahead.