The rising cost of living is likely to put more people off changing jobs this year, leading to slower wage growth.
After last year’s “great resignation”, when the number of people changing jobs surged due to a tight labour market, job moves are likely to fall back to pre-pandemic averages this year, according to Gabriella Dickens at Pantheon Macroeconomics.
Some 3.2% of workers changed jobs in the third quarter of 2021, the highest since records began in 2001, the Daily Telegraph reported.
Switching jobs is a key driver of wage growth, as workers are more likely to move into higher-paid roles.
“There’s going to be a big hit to real disposable income this year,” said Dickens. “There’s the increase in the National Insurance contributions in April alongside the freezing of the income tax thresholds. All those things combined are going to weigh on consumer confidence and keep that fairly low.”
New UK jobs numbers will be published by the Office for National Statistics on Tuesday, showing how the economy fared in November last year.
Last month's data showed unemployment fell to a 15-month low of 4.2% in October, with the number of people on payrolls rising by over 257k in November, and the number of vacancies rising to 1.22mln.
On Tuesday the unemployment number for November is expected to come in at 4.2%, with average weekly earnings falling back to 4.3% from 6% in October.
With the UK labour market having withstood the end of the furlough scheme last September pretty well, economists at ING said, what matters most for the Bank of England are wages.
“The jury’s still out on where [wages] are headed. As various data distortions fade, it looks like wage growth is roughly where it was pre-pandemic, which is a key part of the Bank’s hiking rationale," the ING team said.
“There’s also some evidence that pay rises have been larger in more short-staffed sectors, like IT and transport. Whether we’re headed for a wage-price spiral though, we’re less convinced.”