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Largest public sector wage growth since 2003 while jobless rate ticks up

Largest public sector wage growth since 2003 while jobless rate ticks up

The impact of strikes, and pay settlements to avert strikes, are seen in the latest employment figures which give a mixed picture for the economy.

Public sector wage settlements are at their highest levels since 2003, according to official employment figures that also show a pick-up in the jobless rate.

Data from the Office for National Statistics (ONS) showed average regular pay growth in the public sector of 5.6% between January and March - a time when strikes hit several key services including the NHS and schools amid the cost of living crisis.

There were 556,000 working days lost because of labour disputes in March, the report said.

That was up from 332,000 in February and took the total for the year to date to 1.1 million.

Private sector wage growth was at 7% over the same January-March period.

The wider ONS figures calculated wages, excluding the effects of bonus payments, rising at an annual rate of 6.7% in the year to March.

That was up from the 6.6% figure reported the previous month.

Average weekly earnings were, however, slightly down at 5.8%.


A major concern for the government will be the continuing trend of long-term sickness.

The ONS said 2.55 million people were now out of work for that reason, a new record high.

The figure represents more than 8% of the workforce.

In further signs of a deteriorating jobs market, vacancies also fell - for the 10th month in a row - to 1.08 million.

The unemployment rate stood at 3.9% - up from 3.8% - despite a surge in employment as the number of self-employed grew and more people took part-time work.

The increase in unemployment, the ONS explained, was largely driven by people unemployed for over 12 months.

Darren Morgan, its director of economic statistics, said: "Employment and unemployment both rose again in the first three months of 2023, driven in particular by men.

"This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.

"Despite continued growth in pay, people's average earnings are still being outstripped by rising prices," he noted.

The wage figures, along with core inflation data, are key indicators for the Bank's rate-setting committee.

Members will want to see evidence that both are cooling before taking their feet off the rate hike pedal.

Governor Andrew Bailey said last week, after the Bank imposed its 12th consecutive rate hike to 4.5%, that inflation would be higher this year than it had earlier anticipated.

It blamed the upwards pressure on food - something that is outside its control but which will be reflected in the inflation figures over the months ahead.

The next set of inflation data covering the year to April will, however, show the first major easing in the headline consumer prices index (CPI) number since the infancy of the cost of living crisis.

That is because the effects of the first major surge in energy bills in April 2022 is set to fall out of the calculations.

Economists see CPI easing from its current rate of 10.4% to around 8% when April's figure is revealed next week.

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