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UK Wage Trends: Pay Failing to Keep Pace With Inflation

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Growth of advertised wages dipped in February.

Key Points

  • Advertised pay in job postings rose 3.3% year-over-year in February, falling further behind consumer price inflation.
  • Above-inflation pay growth is still confined to a handful of categories where hiring challenges have been most acute, such as distribution, construction, manufacturing, hospitality and healthcare.
  • Other categories have seen minimal or even negative pay growth.

Growth of advertised wages in UK job postings cooled further in February. Looking at advertised pay in Indeed job postings offers several advantages — timeliness, ability to look at detailed job categories, and reflecting what employers advertise as hiring conditions change. Using a methodology that controls for shifts in the mix of job titles over time, annual pay growth dipped from 3.4% to 3.3%. 

Consumer price inflation was 4.9% in January on the CPIH (Consumer Prices Index including owner occupiers’ housing costs) measure and 5.5% on the Consumer Prices Index (CPI) – measure, and is expected to hit 8% in Q2. Inflation is also expected to stay high following the invasion of Ukraine and further spike in global energy prices, prolonging the real terms pay squeeze for workers. 

A line graph titled “Advertised pay is growing slower than prices” showing the year-on-year growth in advertised wages in UK job postings on Indeed from Jan 2020 to Feb 2022. There was a 3.3% year-on-year increase in advertised wages in February 2022, falling short of the CPIH inflation print of 4.9% year-on-year in January.

Inflation-busting pay rises still limited to a few categories

A handful of occupations continue to see strong wage growth, typically those facing the biggest recruitment challenges as rapid demand growth over recent quarters has outstripped candidate supply. Advertised pay in construction was up 8.6% year over year (y/y) in February, ahead of driving at 8.1%. Food preparation & service, production & manufacturing, personal care & home health, loading & stocking and cleaning & sanitation also saw marked increases. Conversely, advertised pay growth in some occupations has been minimal or even negative. 

Table titled “Inflation-busting pay growth limited to a few categories.” Indeed analysed the year-on-year growth in posted wages in UK job postings in February 2022. The strongest wage growth was in construction at 8.6% year-on-year, while the lowest change was in management at -2.5% year-on-year. 

Methodology

Wage and salary data are extracted from job postings. Wage growth figures were calculated using regression analysis that accounted for shifts in the mix of job titles and job locations within each sectoral category over time. Further details here. Occupational analysis includes roles with at least 50,000 observations of advertised pay in job postings since 2019. 

Information is based on publicly available information on the Indeed UK website, is limited to the UK, is not a projection of future events, and includes both paid and unpaid job solicitations.