UK Wage growth hits a record high, despite a slower jobs market

Now Available - our 2020 Salary Guide
Thursday, July 20, 2023

Despite a lot of fear mongering these past few months, the UK jobs market has continued to defy expectations.

More and more people are looking for jobs in a shrinking market. In the UK, there were roughly 1.05 million open positions in the three months leading up to May 2023, down from 1.08 million the month prior. In fact, the amount of job vacancies has been slowly declining for the past 12 months, with May seeing the highest number of jobseekers in two and a half years.

Wages are an altogether different story. Bucking the trend we’re seeing in Europe and the US, salaries in the UK are hitting new record highs. Between January and March 2023, the average total pay of employees increased by 5.8%, and the regular pay, excluding bonuses, increased by 6.7%. Going back to the same time last year, we can see that the total average weekly earnings have increased from £605 to £642, where it stands currently.

A variety of factors have caused the slowdown in the UK job market. The cost of living crisis is straining household budgets, and the war in Ukraine has created economic uncertainty. Because of this, some companies are postponing hiring decisions or lowering their headcount, and we expect to see this continue for the foreseeable future.

Unlike many other countries where we see a high ratio of vacancies to unemployment, in the UK, the ratio of open positions to unemployed people has decreased, and wage growth has accelerated. The most likely reasons for this include recent public sector pay agreements, a significant increase in the minimum wage, and worker demands for pay to catch up to consistently high inflation.

What does all this mean for employers? This is a very important time to make sure you’ve benchmarked your salaries for any positions you might have before starting your recruitment campaigns. Start by comparing them to the salaries of similar roles in your industry and geographic location. You should also consider the skills and experience required for the role, as well as the employee benefits that you will be offering.

The slowdown in the UK job market is a challenge for employers, but it also presents an opportunity. By benchmarking salaries and offering competitive packages, employers can attract and retain the best talent, which will help them to grow their businesses and succeed in the long term.

For more information, Plus One Recruitment has again put our annual Salary Guide. The 2023 edition includes comprehensive information about current wages, benefits, and impending changes to employment law, along with the most recent published data and analysis on employment in your region. It’s your go-to resource when you are planning and setting a budget for your staffing needs, and it’s completely free! Download it here.