Responding to the CPI inflation figures for September 2024, released by the Office for National Statistics, Ben Harrison, Director at the Work Foundation at Lancaster University said:

“Today’s labour market statistics provide a reminder of the complexities and challenges facing the Government in delivering its pro-growth and pro-worker agenda.

“The Employment Rights Bill has the potential to usher in a more secure and flexible era of working conditions but, today, workers are still barely better off than in 2008 despite recent strong wage growth. Labour demand continues to soften, with vacancies down dropping for the 27th consecutive month, and with over 2.75 million people out of the jobs market due to ill-health the Government must fast track action to grow the economy, and help people stay-in and return to work at the Autumn Budget.

Making work pay – pay rising but people barely better off than in 2008

“Annual nominal wage growth has slowed to 4.9%. This marks the end of a record 25-month run of above 5% pay growth, but due to high inflation, workers are still only £14 a week better off on average in real terms than they were two years ago. Even more alarmingly, average wages are just £20 a week higher in real terms than they were at the start of the global financial crisis in August 2008.

“The Government’s focus this week on boosting growth and levering in more investment to the UK is critical to ending this decade of wage stagnation. But it will only do so if the Government ensures any jobs created are secure, well paid and offer workers clear routes to progression.

Supporting those with ill health to work remains a huge challenge

“The UK employment level is up on the year at 75%, with unemployment decreasing on the year to 4.0% and economic inactivity dropping slightly to 21.8%. Economic inactivity due to ill-health seems to be levelling off and now stands at 2.75 million, with consecutive falls since peaking at 2.83 million in February to April 2024. However, there are now 638,000 more people who are economically inactive due to long-term sickness since December-February 2020.

“The Government has promised to get Britain working and it is positive that the Employment Rights Bill prioritises strengthening flexible working, which can allow workers with disabilities and long-term health conditions to better manage their health and wellbeing while remaining in work. However, if a new ‘day one right’ to flexible working is to mean anything, it is imperative that provisions in the legislation do not inadvertently allow employers to effectively reject flexible working requests out of hand.

“In addition, Government must prioritise reforming and investing in its Work and Health programmes and working with employers to re-design job roles and provide flexibility around existing health conditions to help workers stay in sustained employment.”

Notes: 25-month run of above 5% pay growth is based on Average Weekly Earnings (nominal) - Regular Pay (Great Britain, seasonally adjusted) three-month average.