0829 GMT January 29, 2020
The figures add to evidence that pay pressures are weakening in the UK, even though unemployment has dropped to 5.2 percent, the joint lowest in almost a decade. Official data for the three months to October show regular annual pay growth slowed from 2.5 to 2 percent, a much weaker rate than was typical before the financial crisis, FT reported.
The Recruitment and Employment Confederation, the professional body for recruiters and employment agencies, predicted annual wage growth would remain between 1.5 and 2.5 percent this year because many employers were aligning annual pay settlements with inflation, which is close to zero.
According to its monthly survey, average starting salaries for candidates placed in permanent jobs continued to rise in December, but at their slowest pace in more than two years. Hourly pay for temps grew at the slowest rate for 21 months.
Hiring growth also slowed slightly. Kevin Green, the REC’s chief executive, warned the UK’s referendum on EU membership and the increase in the minimum wage could hit employment growth this year.
“We wait with some trepidation to see the effect the 50 percent increase in the minimum wage in April to £7.20 an hour will have on demand for staff, particularly in low-pay sectors such as healthcare,” he said. “The other bump on the road for business is the EU referendum, which is likely to create uncertainty, which could lead to a reduction in hiring.”
The CBI business lobby group has also warned the minimum wage increase, together with an apprenticeship levy on businesses, could cost jobs and damage economic growth. However, not everyone agrees: the CIPD, the professional association for human resources, expects employment to continue to rise strongly this year, predicting instead that employers will cope with the extra costs by curbing pay rises for those unaffected by the minimum wage.
The data on pay from the recruitment industry, while unofficial and often volatile, will bolster the case for the Bank of England to leave interest rates at their record lows for now. Last month, the Monetary Policy Committee voted eight to one in favor of holding rates steady until there was a 'sustained firming in domestic cost pressures', such as wage growth.
Minouche Shafik, one of the bank’s deputy governors, said in a recent speech she would not vote to raise interest rates until she had strong evidence that wage growth was resuming its recovery.