Annual growth in average earnings continued to strengthen in the private sector, led by a noticeably high figure of 4.6% in finance and business services in the year to October, according to the latest data from the Office for National Statistics (ONS).
The ONS notes that two factors are contributing to the relative recovery in average earnings growth. Both are consequences of changes in the composition of the workforce, which can have significant effects on the average weekly earnings series. First, the average is affected by a fall in the number of lower-paid jobs. Separate labour market data released today by the ONS shows a rise in the number of redundancies to 227,000, nearly double the figure for the same time last year. The last time redundancies showed as high as this was in 2009, during the last major economic crisis. Many of the job losses this time are likely to have been in low-paying areas negatively affected by the pandemic, such as high street clothing retail. Secondly, the average has also been nudged up by a fall in the number of people entering the labour market. This effect is often seen at the onset of recession, as people realise that fewer jobs are available.