Business

Labour market: Wage growth in Northern Ireland falls back below inflation

Data from HMRC’s PAYE system showed the median monthly wage in the north stood at £2,094 in August, which was 6 per cent (£119) higher than 12 months earlier.  Inflation in the UK stood at 6.8 per cent in July.
Data from HMRC’s PAYE system showed the median monthly wage in the north stood at £2,094 in August, which was 6 per cent (£119) higher than 12 months earlier. Inflation in the UK stood at 6.8 per cent in July. Data from HMRC’s PAYE system showed the median monthly wage in the north stood at £2,094 in August, which was 6 per cent (£119) higher than 12 months earlier. Inflation in the UK stood at 6.8 per cent in July.

THERE were further signs that the north’s labour market weakened last month, new government data published on Tuesday suggests.

Rates of unemployment and economic inactivity are on the rise, according to the Northern Ireland Statistics and Research Agency (Nisra), while wage growth fell back last month below the UK’s annual rate of inflation.

Data from HMRC’s PAYE system showed the median monthly wage in the north stood at £2,094 in August, which was 6 per cent (£119) higher than 12 months earlier.

Inflation in the UK stood at 6.8 per cent in July.

July’s wage data for Northern Ireland had indicated median monthly earnings had surpassed inflation, rising by 7.5 per cent year-on-year.

Tuesday’s fresh data suggests that wage growth has stalled, with analysts expecting UK inflation to be higher than 6 per cent for August.

The Northern Ireland wage data also tells a different story than in Britain, where the Office for National Statistics has said GB wage growth has caught up with rising prices for the first time in nearly two years.

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Nisra's new report showed the total number of employee jobs recorded by HMRC in the north fell 0.1 per cent from July to 791,300 in August.

The number of people claiming unemployment related benefits rose by 0.4 per cent to 36,700 over the same period.

Nisra said it received confirmation of 200 redundancies in August 2023.

But the number of new redundancies proposed during August were too low to make public.

Officially, the north’s unemployment rate increased to 2.7 per cent for the three months to July, 0.3 percentage points (pps) higher than the previous quarter.

In another sign of a weakening labour market, the total number of weekly hours worked in Northern Ireland was estimated at 27.8 million hours, a decrease of 4.2 per cent on the previous quarter.

LABOUR SUPPLY CRUNCH

Ulster Bank’s chief economist Richard Ramsey said: “The local labour market has been coming off the boil since the Spring. 

"Two growing concerns are the falling employment rate and rising economic inactivity rates. These hit 10-month highs (26.9 per cent) and lows (71.1 per cent) respectively in the three months to July. 

"They also compare unfavourably with the position that prevailed before Covid-19 hit. These trends feed into a wider economic concern, namely the emerging labour supply crunch."

The economist said the labour crunch comprises three parts: A declining working-age population; a rise in economic inactivity (or reduced economic activity); and those in work choosing to work less.

"Demographic trends, such as an ageing population, point to an increasing shortfall of available workers," he said.

"Meanwhile, the legacy of Covid and deteriorating health outcomes is shrinking the supply of workers further. Throw in the new ways of working and post-covid lifestyle choices and employers are experiencing severe shortages in labour.

"Solutions on attracting more migrants from abroad and/or replacing labour with machines (automation), are required sooner rather than later. 

"The labour supply crunch has arrived."

QUARTERLY EMPLOYMENT SURVEY

Nisra also published the results of its Quarterly Employment Survey (QES) on Tuesday, which estimates the total number of employee jobs in the north reached 813,450 in June, which was 1,370 down(-0.2 per cent) over the quarter, albeit 13,740 higher than a year earlier (+1.7 per cent).

Nisra said June 2023 marked the first quarterly decrease in employee jobs following eight consecutive quarterly increases.

The QES recorded quarterly increases in manufacturing jobs (+180), construction (+670) and other industries (+170).

But employee jobs within the services sector decreased over the quarter (-2,390 jobs) to June 2023, following the series high seen in March 2023.

Public sector jobs increased 0.2 per cent over both the quarter (+540 jobs) to 223,750 jobs in June, while private sector jobs increased marginally to a new series high of 590,950.