Wages in the United Kingdom have surged by 7.8% in the three months leading up to June, marking the highest annual growth rate ever recorded, as reported by the Office for National Statistics (ONS).
This increase in pay, coupled with lower inflation, signifies a recovery in people’s real earnings, according to ONS director Darren Morgan.
However, the rising wages have raised concerns among policymakers at the Bank of England, who fear that strong pay growth could exacerbate inflationary pressures.
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Despite the robust wage growth, signs of a cooling labor market were also evident in the data.
The unemployment rate ticked up to 4.2% in the June quarter, although it remains historically low.
Job vacancies decreased by 66,000 in the three months to July, indicating potential shifts in the job market.
Companies in the UK are now under pressure to offer higher wages to attract and retain employees. Around 40% of employers have made counteroffers to keep staff who have received alternative job offers, according to a survey by the Chartered Institute of Personnel and Development (CIPD).
This counteroffer trend is expected to persist as recruitment and retention challenges continue.