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PwC comments on ONS labour market statistics

15/02/22

Jake Finney, economist at PwC UK, commented:

“Today’s job figures suggest that, despite low unemployment rates, 2022 will be defined by a shrinking labour market and a real wage squeeze

Around 112,000 people dropped out of the labour market in the three months to December. This was driven by a continued rise in the number of people with long-term sickness, particularly among older workers, with long Covid expected to be the primary cause. As a result, there are now around 0.4m fewer people either working or seeking work than before the pandemic started - equivalent to a 1.1% hit to the pool of available workers. This will have knock-on implications for the UK's economic growth potential. 

"The pay squeeze continued to tighten, as workers saw their real pay falling by 1.2% in the year to December. This is the third time workers have seen their pay squeezed in just over a decade and we expect that this will continue throughout 2022 as nominal pay rises are unable to keep up with surging inflation. 

"On a more positive note, today's data shows that the UK labour market has been resilient to the Omicron variant. The unemployment rate fell to 4.1% and vacancies grew once again, showing that employers were willing to keep hiring despite Omicron. Total hours worked increased by 0.1m despite consumer-facing businesses facing high levels of cancellations and many workers having to self-isolate."

 

 

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