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Pace of wage increases slows but unemployment rate unchanged | Business News

The pace of wage growth has eased back from a record level, according to official figures that showed a resilient labour market despite the stalling economy.

The Office for National Statistics (ONS) reported that average wages excluding bonuses were 7.7% higher than a year earlier in the three months to September.

That was down from the revised 7.9% level registered last month but meant that wages were still rising by 1% after taking the rate of inflation into account.

The ONS said it was the highest rate for real wage growth for two years though economists declared that the data was a clear sign that wage growth was slowing – raising the chance of an earlier than expected interest rate cut by the Bank of England next year.

The easing in the headline wage figure, while slight, will be welcomed by rate-setters who see high pay growth as an inflationary threat.

That is because improved spending power tends to boost demand, and therefore price growth.

The Bank has twice held off on a further interest rate rise since September due to evidence its 14 consecutive hikes, aimed at taming the pace of price increases, is having the desired effect.

The employment data, though, is complicated by the fact that it currently comes with a big health warning.

The ONS is working hard to bolster participation rates for its Labour Force Survey, which is the backbone of the employment figures.

Falling response volumes have knocked the perceived accuracy of the estimates.

The ONS has responded with a series of measures including the return of in-home interviews and re-contacting households that fail to respond.

The problems mean that for a second successive month, the report is incomplete.

It is a crucial tool for providing an overview of the UK labour market and forms a big part of decision making at the Bank of England when deciding interest rate levels.

The decline in the wage figure was mainly explained by one-off payments to NHS staff, made in June, falling out of the calculations.

At 7.7%, it remains above the rate of inflation though that is widely tipped to fall dramatically when the figures covering the year to October are released on Wednesday.

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BoE: Inflation is ‘still too high’

Economists polled by the Reuters news agency see the consumer prices index (CPI) measure easing to 4.8% from the current level of 6.7%.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Much slower wage growth is increasing the chances of a rate cut in H1 (first half) 2024.”

He explained: “Month-to-month growth in average weekly earnings excluding bonuses slowed to 0.24% in September – or 2.9% on an annualised basis – well below the 0.64% average increase in the first eight months of 2023.

“September’s pace is broadly consistent with the 2% inflation target, given trend productivity growth of almost 1%.

“What’s more, the month-to-month change was boosted by sharp increases in pay in the public sector; private-sector wages rose by just 0.13%, or 1.6% on an annualised basis.”

The wider ONS figures showed the UK’s unemployment rate remained static at 4.2% despite the stalling economy – hurt by the Bank’s action to raise borrowing costs.

Darren Morgan, ONS director of economic statistics, said: “Our labour market figures show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter.

“The number of job vacancies fell for the 16th straight month. Nevertheless, vacancies still remain well above their pre-pandemic levels.”

Chancellor of the Exchequer, Jeremy Hunt. responded: “It’s heartening to see inflation falling and real wages growing, keeping more money in people’s pockets.

“Building on the labour market reforms in Spring, the Autumn Statement will set out my plans to get people back into work and deliver growth for the UK.”

NHS workers had to be given salary top-up to avoid minimum wage breach, GMB union head says | Politics News

The lowest paid NHS workers had to be given a salary top-up this year to avoid breaching national minimum wage laws, the head of a union said as she pleaded with ministers to negotiate pay.

Rachel Harrison, national secretary of the GMB union, told MPs that NHS staff had to be given more money this year by the health service.

Ambulance workers who are GMB members are striking on Wednesday, while nurses are taking industrial action today as both call for better pay, working conditions and patient conditions.

Nurses launch second day of strikes – live politics updates

Ms Harrison told the Health and Social Care Committee workers such as cleaners, call handlers, caterers and patient transport staff were being paid less than the minimum wage so had to be given more money to avoid the NHS being prosecuted by HMRC.

The national minimum wage has been £9.50 an hour for adults aged 23 and over since April this year and was £8.91 the year before. It is rising to £10.42 from April next year.

If an employer does not pay the national minimum wage HMRC can fine them up to £20,000 and take criminal legal proceedings.

Ms Harrison warned the NHS “will be in the same position” this year because the government is refusing to negotiate on pay for this fiscal year, ending in April.

“These are people that carry out crucial jobs within our NHS,” she told MPs.

“And because of a dated and not fit for purpose pay review body process that significantly delays getting money into people’s pockets and the approach of this government towards public service cuts and austerity means that we have got members working right across the NHS on low pay and this is the exact reason we’re seeing them leave.⁠”

Read more:
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‘Door is open’ to unions, says health minister

She added that she does not expect a pay offer to be made at a meeting later today with the health secretary after health minister Will Quince earlier told Sky News it would be about which cases ambulance workers would have to go to during the strike – and not pay.

“We’ve been given half an hour to meet with the secretary of state to discuss an emergency cover for tomorrow, which considering our strike starts at midnight, is a bit late in the day,” she said.

“But those agreements have already been reached at local level. So unless the secretary of state is willing to talk to us about pay today, those strikes are set to go ahead.”

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‘We’re committed to continue strikes’

Ministers have continually insisted pay negotiations are not up to them as the independent pay review bodies recommend what salary increases should be, and the government has accepted that.

The pay review bodies are made up of experts in their field without political affiliations who take evidence from a range of sources, including trade unions and staff.

Ms Harrison pleaded with Mr Barclay to talk to the unions and make a pay offer and accused the government of being behind the pay review body’s recommendation.

“GMB is refusing to engage with the pay review body this year because we believe the government is behind that recommendation that was made back in the spring of this year,” she added.

“And we believe that what we actually need to see is true reform of the pay review body process.”

Chancellor Jeremy Hunt expected to announce rise in national living wage | Politics News

Chancellor Jeremy Hunt will announce a rise in the national living wage this week, Sky News understands.

Mr Hunt and Prime Minister Rishi Sunak will accept an official recommendation to increase the living wage from £9.50 an hour to about £10.40 an hour, according to news first reported in The Times.

The rise of nearly 10% would benefit around 2.5 million people, the newspaper said.

Among the other measures reportedly being considered are:

• Cost of living payments for eight million households worth up to £1,100
• Payments of £650 for those on means-tested benefits such as universal credit, £150 for disability benefit recipients, and £300 for pensioner households
• Freezing of thresholds for income tax, national insurance, VAT, inheritance tax and pensions savings
• Removing the requirement for local authorities to hold a referendum before increasing council tax by more than 2.99%, allowing them to raise significantly more money. The new threshold could be 5%, The Daily Telegraph reported

The moves are part of plans to cut spending by £33bn and raise taxes by £22bn to plug a black hole in the country’s finances.

The government has already said that the poorest households will be prioritised, leaving wealthy and middle-income households to bear the greatest burden from tax rises.

One of the main focuses will be energy costs, with changes to be made to the price guarantee announced in September by Mr Sunak’s predecessor, Liz Truss.

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The price guarantee meant that a typical household would face energy bills of no more than £2,500 a year, but this could rise to as much as £3,100 from April – and even this would still leave taxpayers with a large bill.

There have also been hints that the autumn statement on Thursday could include benefits and pensions being increased in line with inflation – a move that will cost around £11bn.

The triple lock on state pensions – which guarantees an increase in line with average earnings, inflation, or 2.5%, whichever is higher – was part of the Conservatives’ manifesto in 2019.

But, as inflation soars past 10%, it has become increasingly expensive.

Read more:
Ed Conway: The UK has one foot in a recession but it’s worth being wary of forecasts during uncertain times
Jeremy Hunt says everyone will have to pay higher taxes – but richest will make larger sacrifices

Speaking to reporters accompanying him on his trip to the G20 summit in Bali, Mr Sunak said: “My track record as chancellor shows I care very much about those pensioners, particularly when it comes to things like energy and heating because they are especially vulnerable to cold weather.

“That’s why when I announced support earlier this year as chancellor we made extra provision for pensioners to receive up to £300 alongside their winter fuel payments to help them cope with energy bills over the winter.

“So I am someone who understands the particular challenge of pensioners.

“They will always be at the forefront of my mind.”

TUC calls for minimum wage to be raised to £15 an hour ‘to put an end to low-pay Britain’ | Business News

The minimum wage should be raised to £15 an hour, the Trades Union Congress says, as it declares it is “time to put an end to low-pay Britain”.

Currently, workers aged 23 and over are entitled to a minimum wage of £9.50 with lower rates for younger employees, but the TUC says all workers should have the same entitlement, regardless of age.

Since the minimum wage was introduced, its level as a proportion of the median wage has increased – starting at 47% in 1999 and expected to reach 66% by 2024, although the TUC said that a more ambitious target of 75% is the “logical next step”.

Frances O’Grady, general secretary of the TUC, said: “Every worker should be able to afford a decent standard of living.

“But millions of low-paid workers live wage packet to wage packet, struggling to get by – and they are now being pushed to the brink by eye-watering bills and soaring prices.

“For too long workers have been told that businesses can’t afford to pay them more. But again and again the evidence has shown that firms are still making profits and increasing jobs – we can afford higher wages.

“And higher wages are good for the economy – more money in the pockets of working people means more spend on our high streets.

“It’s time to put an end to low-pay Britain. Let’s get wages rising in every corner of the country and get on the pathway to a £15 per hour minimum wage.”

She said ministers should introduce fair pay agreements to increase pay and productivity in low-paid sectors; promote decent work above shareholder interests; and invest in good jobs in every part of the country.

“That’s how you boost pay packets and put Britain on a direct path to a £15 minimum wage.”

Proposals also include corporate governance reforms and a “life-long learning and skills strategy” designed to address labour shortages.

The call comes after inflation reached 10.1% in July and as the energy price cap is forecast to surge past £5,300 a year in April.

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Those two issues are the main drivers of a cost of living crisis that has prompted workers in some sectors to resort to industrial action as their wages fail to keep up.

The TUC said that the UK has experienced a “pay loss of historic proportions” due to an “abject failure” by successive Conservative governments to encourage pay rises.

Last week, the Office for National Statistics said workers suffered a record real-term pay slump of 4.1% after inflation in the three months to June.

When inflation was not factored in, regular pay, excluding bonuses, rose by 4.7% in the three months to June.