Marvin OnumonuWages fell in January for the first time in a year, according to Employment Hero’s January Jobs Report.
The data showed monthly wage growth dropped by 1% compared to December.
Wage growth in the North took the biggest hit, down 4.9% month-on-month.
Even with this drop, year-on-year wage growth was up 5.6%.
This is a shift from a -2.6% dip recorded in January last year and is the first time since June 2025 that wages have risen above inflation.
Employment growth saw a small rise, up 0.6% compared to December.
This followed a period of decline, but the numbers suggest a gradual recovery.
Year-on-year, employment growth went up 4.4% in January, compared to 2.5% the month before.
Levels are still below those seen before April 2025.
Kevin Fitzgerald, UK managing director at Employment Hero, said: “January’s wage dip is an early warning sign.
“Small businesses are heading into 2026 facing higher wage bills and significant regulatory change in April and many are already tightening the purse strings.
“While year-on-year employment growth is improving, the recovery is fragile.”
Fitzgerald added: “If costs continue to rise faster than confidence, pay growth and hiring could be the first casualties.
“Policymakers need to be careful not to overload the very businesses driving the UK’s employment recovery.”
