UK Pay Growth Hits Near Four-Year Low Amid Slowing Hiring

Recent surveys and reports indicate that wage growth for new hires in the UK has slowed to its weakest pace in over four years, signaling a cooling labor market amid rising job seeker availability and cautious employer hiring. Median pay settlements fell to 3.0% in the three months to July, the lowest since late 2021, with only 9% of firms offering increases of 4% or more, reflecting employers' concerns over economic uncertainty and fears of upcoming tax rises in the November budget. The slower wage growth eases inflationary pressures, offering some relief to the Bank of England and potentially reducing the need for further interest rate hikes. However, this slowdown challenges the government's commitment to improving living standards, especially as households continue to face high costs for food, mortgages, and taxes. The Recruitment & Employment Confederation and Incomes Data Research highlight that while job vacancies have declined, the number of job seekers has surged due to redundancies and job security fears, with many companies postponing expansion and hiring plans. Overall, the data portrays a labor market shifting from tight conditions with wage pressures toward more balanced dynamics with slower pay growth and increased labor supply.