Pay growth hits 4% for first time since 2008

UK workers are receiving pay rises of 4% on average - the highest level since June 2008.

Pay growth has peaked again, reaching the highest level recorded since June 2008.

The Office for National Statistics (ONS) reports that pay grew by 4% on average in the three months to July 2019. This is a jump from 3.7% recorded in the previous set of data from the ONS.

This figure includes bonuses however. Excluding bonuses, pay grew by 3.8%, a drop from last month’s data where pay excluding bonuses grew by 3.9%.

In real terms, after adjusting for inflation, this means that workers are receiving pay rises of 2.1% including bonuses and 19.9% excluding them.

A graph showing how pay for employees grew

Source: Office for National Statistics, Monthly Wages and Salaries Survey

Elsewhere, the ONS provided an update on the latest employment figures.

The UK unemployment rate is currently 3.8%, which is lower than the 4% recorded 12 months ago and unchanged since the last update.

However, Pawel Adrjan, UK economist at job site Indeed, adds that there are some negative figures too.

He says: “The labour market is finally running out of headroom. With Britain’s jobs boom slipping into the rear-view mirror, the number of new jobs being created has slowed substantially; just 31,000 over the past quarter, a number so small it is within the statistical margin of error.

“But this is not yet a decline - more a pause for breath. Both the employment and the unemployment rates are holding steady, which is a significant achievement against the backdrop of a stagnant economy and risk-averse employers who are growing increasingly reluctant to hire.”

However, Mr Adrjan is more upbeat about wage growth.

He adds: “So, while it’s ‘steady as she goes’ on the jobs numbers, workers are reaping the dividends in their pay packets. Average wages rose by a relatively brisk 3.8% over the past year, driving inflation-adjusted salaries back up to within just a few pounds of their pre-crisis peak.

“The steady rises in wages are a side-effect of the tightness in the labour market - as recruiters ramp up salaries in an effort to lure new recruits and retain existing staff.

“On the recruitment front line, that battle for talent is still raging. And with the economy clearly hovering at the full employment mark, wage inflation is likely to continue - unless and until a recession takes the wind out of employers’ desire to hire.”

- This article was first written by our sister magazine Moneywise.

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