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Live News: UK labor shortages are getting worse but average earnings are starting to fall

Labor shortages in the UK worsened in late 2021 as job vacancies rose to a record high, but average earnings began to fall as inflation outpaced wage growth.

Official data released on Tuesday showed that unemployment fell to 4.1 percent in the three months to November, 0.1 percentage point above the pre-pandemic rate.

The employment rate rose to 75.5 percent but remains 1.1 percentage points below its pre-crisis rate – due to a rise in inactivity, which the Office for National Statistics says is due to older workers leaving the labor market.

As employers struggle to hire, job vacancies rose to a record 1,247,000 in the three months to December – the equivalent of four in every 100 worker jobs in the economy, with a quarter million job vacancies in health and social services alone .

There was little sign of a hit to employment in the early stages of the Omicron outbreak, with real-time data for December showing the number of wage earners rose by 184,000.

But Tony Wilson, director of the Institute for Employment Studies, said the figures were “disappointing” as inactivity is mounting despite unprecedented demand for staff.

While staff shortages have led to faster wage growth in some sectors, the ONS said average earnings fell in real terms, with inflation outpacing wage increases.

The key measure of average weekly earnings growth excluding bonuses was 3.8 percent for the three months to November — leaving real earnings flat over the same period, falling 1 percent in November alone.

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