Zarah ChoudharyEmployees in the UK have enjoyed the strongest year for real wage growth since 2005, with real regular weekly pay excluding bonuses growing by 2.2% by November 2024, according to the Resolution Foundation.
The number of employee jobs fell by 47,000 in December, following a sharp fall of 32,000 in November, according to the latest data from the Office for National Statistics (ONS).
Vacancy levels also returned to pre-2019 levels.
The Resolution Foundation estimated the employment rate for those aged 16 and over is now 61.1%, down by 0.7% points since its post-pandemic peak.
This equated to 374,000 fewer workers in employment.
While the official employment figures still underestimated job levels across the UK, the gap is shrinking.
The foundation noted that Britain’s ongoing productivity challenges mean pay rises are forecast to fall sharply in 2025 and over the rest of the Parliament, contributing to weak income growth.
However, if wages continue to defy expectations without fuelling high inflation, the outlook for living standards could improve.
Nye Cominetti, principal economist at the Resolution Foundation, said: “Britain’s jobs market has been in decline throughout the second half of last year, mirroring the UK’s wider economic performance, with the number of employees have fallen consistently since May.
“But these sobering economic trends have yet to materialise in workers’ pay packets.
“After decades of stagnation, 2024 was strong – real wages had already risen by a healthy 2.2% by November last year – making it the best year for wages since 2005.
“This unexpectedly strong pay growth could just turn out to be a blip, or reflect an unmeasured productivity gain.
“The more likely explanation though is that workers are trying harder to rebuild their pay packets after the high inflation of the past three years.
“This is great news for workers, if they can get a job. But it’s less welcome for the Bank of England as it muddies the picture over whether or when to reduce interest rates.”
