The value of regular pay, excluding bonuses but adjusted for inflation, fell 2.9% in the three months to August 2022, as the squeeze on workers’ pay continues.
According to official labour market figures from the Office for National Statistics, unemployment fell to 3.5%, its lowest rate since December 1973.
The ONS said that regular pay grew by 5.4% in the June to August, compared to the same period a year before, the strongest growth recorded outside the coronavirus pandemic.
Average regular pay growth was 6.2% for the private sector and 2.2% for the public sector, the largest difference between the private and public sectors outside the pandemic. Growth in total pay (including bonuses) was 6.0%.
The UK employment rate for June to August 2022 was 75.5%, still 1.0 percentage point lower than before the pandemic.
The rate of economic inactivity rate increased to 21.7% in June to August 2022, up from 21.1% in March to May 2022. This was largely driven by those aged 50-64 and 16-24 years. The number of people economically inactive because they are long-term sick has increased to a record high.
The number of job vacancies fell by 3.6% in the quarter, the third consecutive quarterly fall, and now stands at 1.246 million.
Jonathan Boys, labour market economist for the CIPD, said: “The number of vacancies may be starting to fall but it’s the relative balance of supply and demand for labour that determines how difficult recruitment is.
“Unemployment too has fallen to a record low and inactivity increased, both of which restrict the available number of candidates.
“There is also a worrying continuation of the trend towards increased inactivity due to long-term sickness. This requires urgent attention from employers and government to address problems early on, to ensure people get the support they need and don’t fall out of the labour market entirely.”
Stephen Evans, chief executive of Learning and Work Institute, said: “We are now in the grip of a prolonged crunch in living standards. Real wages are falling at their fastest rate this century and, with inflation remaining high, further falls are likely.
“If anything, this makes it more important that the government uprates benefits in line with inflation, rather than see further falls in a safety net that has been reduced over recent years.”
Tony Wilson, director at the Institute for Employment Studies highlighted that the last time unemployment was this low was Christmas 1973, when Slade topped the charts.
“Despite this record low unemployment, there are still more than a million unfilled jobs and over half a million more people out of work than before the pandemic began. This is being driven in particular by an alarming growth in economic inactivity due to long-term ill health, which is up by 170,000 in the last three months alone and has reached its highest figure in at least three decades (2.49 million),” he said.
He added that virtually none of the people who have left the labour market are on unemployment benefits and most are not on benefits at all.
“The focus needs to be on how we can do much more to help people back into work instead of threatening to cut their benefits. A good place to start would be by extending access to the Restart scheme, where government now expects to spend £1.2 billion less than it forecast a year ago. This investment will likely more than pay for itself in the longer run and not using it would be a complete false economy, reducing access to services for people out of work in order to fund tax cuts for those better off in work.”