According to the Office for National Statistics (ONS) in their January Labour Market Overview, nominal wages in the UK rose by 6.4% in the three months to November 2022, but in real terms (adjusted for inflation) this actually represented a fall of 3.8%. In this month’s Lightcast UK Labour Market Review, along with data on employer hiring demand, we use insights from job postings data to take a look at advertised salaries in more detail. This allows us to dig deeper behind the headlines published by the ONS, including identifying some potentially alarming news showing a fall in the level of salaries being advertised.
Advertised salaries were significantly lower in January than December
Job postings data complement official statistics by offering almost-real time information on recruitment demand and employers' needs. They are also a good source for further understanding how the labour market is responding to the cost of living crisis: compared to the US and many European countries, the UK is uniquely positioned with almost 40% of job postings including information on salaries.
In last month’s Review, we saw that median advertised salaries for both graduate and non-graduate roles up to the end of 2022 were significantly higher than a year before, but both had actually fallen in real terms (taking inflation into account). In January, the situation actually deteriorated, with the median advertised salary for all roles being £31,200, down from just below £33,000 in December 2022. This decline has been driven by a drop in median advertised salaries for graduate and managerial roles, which were down from £40,100 in December to £39,400 in January, whilst non-graduate roles remained largely unchanged at just over £25,000.
Fastest growth in advertised salaries in 2022 generally seen in IT roles
As well as looking at aggregate-level salary data, we can also dig down to identify which occupations have seen advertised salaries growing or declining. Using the Lightcast Occupations Taxonomy - a more granular taxonomy than the ONS’ Standard Occupations Classification - we've identified the top and bottom ten occupations in terms of growth in advertised salaries from 2021 to 2022.
As you can see, there are a number of disparate occupations in the top ten, such as Cyber Analyst, Nanny/Babysitter, and Graphic Designer. However, one theme does emerge, which is that many of them are IT related, such as Cyber Analyst (28% growth); Software Developer (13%); and IT Manager (12%). At the other end of the scale, it is noticeable that some of the biggest falls in advertised salaries are in teaching roles.
Overall recruitment demand remains strong
Despite the fall in advertised wages we’ve seen above, recruitment demand remains buoyant with 1.1 million new postings and 2.9 million active job postings in January 2023, compared to 920,000 and 2.6 million in December 2022. Whilst this increase is largely reflective of the traditional Christmas lull in the number of job adverts being posted, it is notable that there is a year-on-year increase, with new job postings in January 2023 up 15% on January 2022 (approximately 150,000). All of which suggests a labour market in which employers are still trying to recruit in large numbers, despite the many economic uncertainties.
The largest growth in recruitment activity in January was in Derby
In the charts below, we’ve highlighted the top 20 areas in the country for month-on-month growth in all job postings and graduate job postings (click on the arrow at the top to toggle between the two). Derby not only tops the list for growth in all job postings, with 29.8% growth in January compared to December, but it also leads the way for graduate postings with growth of 34.4%.
More generally, the top growth hotspots for all job postings were exclusively in England, with at least one hotspot per region except the North East. Whereas for graduate postings, Scotland makes it into the top 20 with Edinburgh seeing month-on-month growth of 19.1%.
According to Elena Magrini, Lightcast's Head of Global Research:
The ongoing cost of living crisis is affecting people right across the labour market. Looking at advertised salaries in job postings shows that while employers raised the salaries they offered in 2022, this rise still falls short of inflation. To compound this, we have seen a decline in advertised median salaries over the past month, driven by graduate and managerial roles. Unless inflation slows down, this fall in advertised salaries risks leaving workers further behind the cost of living.
Look out for our next UK Labour Market Review on 13th March - the day before the next ONS Labour Market release.
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