UK New Hire Wage Growth Hits 4-Year Low—What It Means for Your Portfolio
Wage growth for new UK hires just hit its slowest pace in four years—dropping to levels not seen since 2021. Forget soft landings; this feels more like economic gravity.
Behind the Numbers
Employers are pulling back—hard. With hiring momentum cooling and companies trimming salary offers, the post-pandemic pay surge looks officially over. Not exactly the ‘high wage economy’ everyone was promised.
Broader Implications
Slower wage growth signals caution. Less disposable income? Check. Tighter consumer spending? Almost certain. For traditional markets, it’s another headwind. For crypto? Another reason why decentralized finance keeps gaining ground against sluggish legacy systems.
Final Take
While economists fret over percentages, smart money eyes alternatives. After all, when fiat systems stutter, digital assets don’t just compete—they captivate. Maybe it’s time to ask: who needs a raise when you’ve got ATHs?
Employers cut hiring as candidate supply rises
According to the survey, employers are being cautious with their hiring. Escalating costs and a brittle economy are to blame. Many companies have put off expansion plans, such as hiring, until they see more signs that the economy is in clearer territory.
At the same time, the ranks of job seekers have swelled. There was a pickup in the availability of candidates at the quickest pace since 2020. Job losses, hiring freezes, and concern over job insecurity have prompted more people to enter the labour market.
Vacancies fell sharply for a sixth consecutive month. Job postings in the retail and hospitality sector saw the sharpest decreases. Construction was the only industry to report a greater demand for permanent staff, providing a rare bright spot.
Permanent job placements dropped again, with cost pressures and company caution holding back hiring. But the decline was the slowest in three months, suggesting the worst of the downturn may end.
Modest pay growth reduces inflation risk but increases political pressure
The news is some relief for the Bank of England. Policymakers have worried that workers will seek higher wages as inflation has surged lately. To date, those fears have not come to pass. Slower pay growth reduces the risk of “second-round” effects, which might otherwise entrench inflation.
But for the government, it’s more complicated. Weak wage growth and increasing unemployment further complicate Starmer’s promise to improve living standards. Families are already squeezed by soaring food prices and energy bills. And the threat of more tax hikes in the autumn budget may only increase the pressure.
Jon Holt, group chief executive and UK senior partner at KPMG, said the trading environment continues to be “complex”, with many chief executives holding off on further investment and hiring.
Neil Carberry, chief executive of the REC, said there was still life in the jobs market but noted that with fewer jobs available and more people seeking work, the overall picture remained subdued. He cautioned that businesses WOULD closely watch the Autumn Budget in the hope that the Chancellor would avoid measures increasing the cost of hiring staff.
The slowing of payroll gains bolsters the case for the Bank of England to weigh interest-rate cuts in the months ahead. When unemployment rises and inflation pressures abate, pleas for monetary support will become increasingly louder.
However, sluggish wage growth is a reality for families: Incomes are falling behind growing living costs. Once more, the gap between pay and prices is at the center of Britain’s economic debate.
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