New data out this morning show that the economy and labour market continue to recover from the worst of the pandemic.
The unemployment rate sits at 3.8%, down 0.3% points on three months ago, with the employment rate at 74.5%, down 0.1% points on the previous three months but up 0.6% on a year ago.
Yet, inflation is outpacing wage growth which, combined with scheduled price increases (particularly for energy) as well as increases in national insurance contributions next month, means that households are facing an unprecedented squeeze.
UK data on wage growth shows that regular pay, excluding bonuses, lags inflation. Adjusted for inflation, growth in pay on the year (exc. bonuses) was -1.0%.
Commenting, Dr Stuart McIntyre, Head of Research at the University of Strathclyde’s Fraser of Allander Institute at the University of Strathclyde, said: “While the number of people unemployed in Scotland continues to fall, we’re seeing the emergence of an acute cost of living crisis for households, with the rising cost of living outpacing pay growth.
"The number of job vacancies across the UK has hit a new record level, but this has yet to translate into significant increases in wages. However, with inflation forecast to continue to increase through 2022, businesses are going to face pressure to increase their wage offers to attract and retain key staff.
"The cost of many household essentials, including energy, is set to rise significantly in the next few weeks, and with wage growth failing to keep track, family budgets are being squeezed. Added to this, from April there is due to be a hike in national insurance contributions, further reducing take-home pay for workers.
"Employer national insurance contributions are also set to increase from next month which, alongside rising input prices and upward pressure on wages, will further increase the costs facing businesses.
"The Chancellor will unveil his Spring Statement next week, and the focus will be on what measures he brings forward to tackle the growing cost of living crisis facing families across the UK, as well as to help businesses navigate the challenges ahead.”