Labour market facing challenges as wage growth falls and long-term sickness remains historically high

Supermarket worker using digital table while checking inventory at dairy section.

Responding to the new Labour market overview February 2024 released by the Office for National Statistics, Ben Harrison, Director of the Work Foundation at Lancaster University said:

“Ahead of the last Spring Budget before the General Election, today’s figures show the labour market continues to face challenges as wage growth falls and levels of long-term sickness remain historically high.

“For millions the cost-of-living crisis is not over, and yet the tide is continuing to turn on pay. After record pay increases in September 2023, workers are now seeing only modest real wage growth of 1.4%.

“This underpins why the OBR is forecasting living standards will be 3.5% lower in 2024-25 than before the pandemic.

“Data shows there are now 2.8 million people who are economic inactive due to long-term sickness, which is at one of the highest levels since records began in 1993. The recently revised ONS figures show that since before the pandemic, the UK now has just under 700,000 more working age adults out of the labour market due to work due ill health.

“Against this backdrop, the Government may be tempted to tighten welfare sanctions even further to help fill the 932,000 vacancies and reduce the benefit bill.

“Doing so will risk pushing those reliant on Universal Credit into low quality, insecure work – which could exacerbate any underlying health condition they have and is unlikely to lead to sustained employment. Instead, the focus should be on scaling up investment in the availability of health and occupational support services and driving up the quality of jobs on offer.”

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