UK Wage Growth: Things You Need To Know

Introduction

2022 saw a change to the UK minimum wage, and 2023 will see another. For individuals who are 23 years of age or older, it is now £9.50 per hour, an increase from the prior year.

To ensure they follow the law and treat their employees properly, employers must keep up with these developments. The only wage rate in the UK that increases annually based on the cost of living is the actual Living Wage. The Living Wage Foundation determines it by factoring in the UK’s real cost of living, including housing, food, and other necessary expenses.

This ensures that employees receive fair compensation that enables them to meet their fundamental necessities and maintain a respectable living level.

Understanding The National Living Wage In The UK

The NLW (National Living Wage) is the minimum hourly wage to which employees over 23 are entitled. The government sets this cap.

The UK National Living Wage will be £9.50 per hour in 2022–2023. Anybody age 23 and up should be compensated at least at this level. You should get the National Minimum Wage, which varies based on your age if you are under 23. Find out what you’re entitled to by looking at the table below.

What Are The Factors Affecting The Wage Growth In The UK?

Given below are some of the most significant factors that are affecting wage growth in the UK.

1. The Shrinking Job Market

The Bank of England’s recent acceleration in wage rise is resulting in businesses being forced to increase compensation packages in order to retain important personnel and entice fresh talent. Other economists counter that a tightening labour market and rising worker negotiating power may also contribute to wage rise and may not be the sole driver.

The most recent Markit/REC employment survey reveals that beginning wages for permanent jobs are increasing at the highest rate in two and a half years. In contrast, the Bank’s Agents’ survey indicates that this year has been the best for pay settlements since the crisis.

Because of the tight labour market and low unemployment rate rather than productivity growth, some economists contend that the pay increase may need to be revised. Moreover, they warn that wage growth may fuel inflationary pressures and force the Bank of England to increase interest rates.

2. The Increasing Cost Of Living

The wage growth in the UK is also heavily affected by the growing cost of living. This is forcing several employers to increase job salaries uk.

While definitely growing at the end of 2016, headline inflation was still far below 2%, but CPI has increased by almost 3%. Consumer pricing expectations are identified as a significant factor that may increase labour prices in 2018 in the most recent BoE agents survey.

3. A Slow Career Start

According to the most recent labour report, average weekly wages increased by 3.4% in the three months leading up to November 2018, marking the strongest rate of pay growth in the UK in over a decade. This is a result of the increased minimum wage, which has increased pay packets over the previous 69 months.

Since regular pay remained stable between November 2016 and February 2017, wage growth did not significantly improve over this time. To better understand the present trend, policymakers are currently examining alternate metrics of pay momentum, such as the 3M/3M annualised rate of wage increase.

4. Slow Rise In Demand

The labour market is still tight generally, but some businesses may be more conservative in their pay discussions owing to worries about the economy’s future and the Brexit negotiations.

This can result in slower consumer spending growth and cost-cutting actions like staff reductions or postponing investment plans. However, the most recent Agents study indicates that these problems will be less of a problem this year.

As a result of some businesses’ caution, the uncertain Brexit, rising input costs, and mixed economic outlook, pay increases may not be considered in the upcoming months.

Get Your Career Rolling

It is crucial to consider the industries that provide the greatest salary while looking for the top paying employment.

Banking and financial services both have high pay rates, while the healthcare industry also includes a lot of high-paid employment.

You should research these niches and get training to assist you in landing the high-paying, satisfying work you desire.

However, if you want to increase your income and enter a profession that will provide you with prospects for a high wage, you might aim for something other than your ideal job right now.