Analysis
By s1jobs
For the first time on record in the UK there are almost as many vacancies as there are job seekers, and with inflation simultaneously running at its highest for 30 years, the Monetary Policy Committee’s Catherine Mann has warned that we could soon witness a “regime change” in the prevailing trend of wage settlements.
In real terms, wages have barely increased since the 2008 financial crisis. When prices have gone up, workers have for the most part been forced to accept lower living standards.
According to data gathered by research group XpertHR, the median basic award during the three months to the end of December – typically the quietest time of the year for pay bargaining – was worth 2 per cent, down from 2.4% in the previous rolling quarter. However, preliminary responses show that the value of settlements shot back up again in January to 2.5%, the highest since December 2008 when they averaged 3.6%.
But this is still not keeping pace with inflation, which hit 5.4% in December as the cost of clothes, food and footwear all surged ahead. More up-to-date figures released last week by the British Retail Consortium (BRC) suggest that shop prices rose by the highest in nearly a decade, almost doubling between December and January.
Workers are understandably keen to protect themselves as much as possible from this cost-of-living crisis, and those in areas of acute staff shortages are increasingly prepared to flex a bit of muscle to do so.
Year-on-year growth in advertised pay rates has been highest in the food, construction, manufacturing and driving sectors, followed by software development and home health care. Only a few occupations – among them legal and management roles – have witnessed a decline during the same period.
READ MORE: Ill winds of staffing struggles strengthen
With energy prices and National Insurance contributions set to increase from April, the Bank of England expects the consumer price index (CPI) measure of inflation to rise further to 6% within the next two to three months.
Some analysts have gone further, predicting that it could hit 7% unless the government decides to pump billions of pounds into the energy sector to cap spiralling heating costs.
Against this backdrop the predicted increase in median basic pay awards provides a glimmer of hope for hard-pressed consumers, but also presents a quandary to Monetary Policy Committee members who want to avoid the formation of a wage-price spiral where higher pay awards continue feeding inflation. Their solution will be further increases in interest rates, though this too will have painful implications for households.
Search the latest jobs in Scotland at s1jobs.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here