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Despite UK job market’s cooldown, starting wages go up 6.5% in May 2024

Increased salaries have not yet translated into an economic feel-good factor due to double-digit inflation, further diminishing UK PM Rishi Sunak's dismal chances in the upcoming general election

Despite a 20% yearly decline in the number of positions available, the average beginning salary for UK employment increased in May 2024 at the highest rate in four months, according to data from the job platform Indeed, adding to the messy picture over the inflation outlook.

It is more than the 6.0% increase in official salary data for the three months leading up to April, a 6.5% increase in starting pay compared to a year ago. The pace of growth was the lowest since September 2022, but it was still twice the amount that the Bank of England considers appropriate for moderate inflation.

Even though headline inflation returned to its objective of 2% in May 2024, the BoE is reluctant to lower interest rates from their current 16-year high due largely to uncertainty about whether pay growth is slowing considerably.

However, increased salaries have not yet translated into an economic feel-good factor due to double-digit inflation, further diminishing UK Prime Minister Rishi Sunak’s dismal chances in the upcoming general election.

Certain economists express concern that the substantial exodus of workers from Britain’s labour force following the COVID-19 pandemic may constitute a long-term storage of inflationary pressures.

However, according to Indeed statistics, the number of empty positions, which is sometimes used as a predictor of future wage and inflation pressures, is 0.9% lower than it was immediately before the COVID-19 outbreak, having dropped by 5% in 2023.

According to Jack Kennedy, senior economist at Indeed, “The UK labour market has continued its adjustment in recent months, while it remains rather tight and competitive for employers in many areas.”

The lowest-paid industries, including childcare, cleaning, security, retail, and hospitality, saw the largest pay increases. In April, the minimum wage increased by about 10%, benefiting a large number of workers in these industries.

According to Indeed, the pandemic and post-Brexit immigration policy changes have made it harder to hire people for low-paying jobs.

Software, engineering, veterinary, and aviation positions have the greatest labour shortages, according to the duration of job advertisements.

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