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UK – Average salary growth doubles in June

29 July 2014

Average salary growth doubled in June, suggesting the labour market recovery is picking up speed, according to the latest UK Job Market Report from Adzuna.co.uk. Advertised salaries rose to £32,933 in June 2014, growing by +1.7% between May and June, more than double the rate of growth witnessed between April and May (+0.6%). It was the third consecutive month in which advertised salaries have risen.

The volume of available vacancies is also rising. There were 839,950 advertised positions in June, +22.3% compared with the same month last year. On a monthly basis, vacancies increased by +2.6%, helping to drive the unemployment rate down to 6.5%, its lowest level in six years.

In a final sign of economic good news, the ratio of jobseekers to vacancies fell to a post-recession low. There were 1.21 jobseekers for every advertised vacancy in June 2014, compared to 2.10 twelve months ago. It was the lowest ratio of jobseekers to vacancies since May 2008.

Andrew Hunter, co-founder of Adzuna, explained: “Greater economic certainty is finally filtering through into a pick-up in salaries. Employers are boosting wages as top talent becomes harder to source, hoping that by supplementing salaries they will attract the best staff. At the same time, the pace of job creation is pulling ahead of the number of workers looking to change jobs. Competition for jobs is falling as a result. The post-recession era of tough rivalry between job hunters is drawing to a close, as the power switches into the hands of those looking to move, rather than those looking to hire.”

Despite the monthly salary uptick, real wages are yet to reflect an increase. Inflation rose to 1.9% in June, but wages are still some way off showing any year-on-year growth. Average salaries fell -1.2% year-on-year in June, equivalent to a drop of £1,054 over the last twelve months.

Mr Hunter continued: “An almost three-fold increase in wage growth compared to May is encouraging, but there is no room for complacency. Even with the recent advertised salary growth factored in, real wages have fallen by over a thousand pounds in the last year. Until wages finally leapfrog inflation, many will continue to feel the economic pinch.”

A recovering London labour market has helped bolster monthly salary growth. In June, London average salaries rose by +1.5% to £40,446, closing the gap on the CPI rate, which stood at 1.9%. Average salaries in the capital have risen by +2.9% since the beginning of the year.

In terms of vacancies, the capital has witnessed stellar increases. There were 188,558 advertised vacancies in London in June 2014, +36% higher than a year ago. The ratio of jobseekers to vacancies in London has also fallen. There were 0.78 jobseekers per vacancy in London in June, compared to 1.48 a year ago.

Mr Hunter commented: “The London labour market is a honeypot for national and international talent. But workers in London suffered disproportionately in the years following the financial crash; while wages have remained stagnant, London property prices – and rents – skyrocketed. A pay rise for the capital’s workers will give them a chance to refill their depleted savings at last.”

Of twelve UK regions, 10 saw annual salary growth in June, with Wales (+19.3%), the South West (+5.1%) and the North West (+3.4%) improving the most. Manufacturing continues to power the economic recovery of the North of England and Scotland as job creation in the sector reached a three-year high. 

Mr Hunter remarked: “The strong salary growth outside of London and South East is the untold story of the economic recovery. The recovering Manufacturing sector and regional job growth funds are boosting areas across the country. Birmingham has been announced as the construction hub for HS2 (High Speed Rail), which will further lift the labour market in the Midlands by generating 1,500 new jobs. Perhaps we can now begin to dispel the myth that the economic recovery has not reached areas outside of London.”

Region Average salary Annual change
Wales £29,499 +19.3%
South West England £29,569 +5.1%
North West England £28,750 +3.4%
West Midlands £30,363 +3.1%
North East England £28,180 +1.9%
Yorkshire and The Humber £28,456 +1.6%
South East England £31,541 +1.0%
Scotland £32,304 +0.7%
Eastern England £30,678 +0.5%
Northern Ireland £29,373 +0.4%
UK £32,933 -1.2%
East Midlands £28,683 -1.2%
London £40,446 -3.3%

Despite the strong salary growth outside of London and the southeast, the best cities in which to find jobs remain in that region, with the sole exception of Aberdeen. The worst cities to find work are still in the north of England, with the exception of Swansea and Southend-on-sea.