Workers are receiving the biggest pay increases since the end of 2008, according to the Office for National Statistics.
Wage growth excluding bonuses for the three months to September is now 3.2%, or 3% including bonuses.
This exceeds the acceleration seen in October of 3.1%, suggesting pay growth is on an upward trend.
Compared to the current rate of CPI inflation of 2.4%, workers’ pay packets are now outstripping rising prices by a healthy amount.
Laura Suter, personal finance analyst at investment platform AJ Bell, comments: “The past few years have seen British workers pummelled by a combination of higher inflation and very sluggish wage growth, meaning they have often faced a real terms wage cut.
“However, the current low unemployment, which stands at 4.1%, appears to have shifted the odds back into workers’ favour, and we’re starting to see wages rise more meaningfully.
Pawel Adrjan, UK economist at the job site Indeed, adds: “Thousands of employers are knocking their heads against the ceiling of full employment - and many are being forced to ramp up wages in order to prise recruits away from their current jobs.
“Despite the modest increase in the unemployment rate, thousands of jobs are going unfilled and the number of unemployed people per vacancy remains at a record low of 1.6.”
Helen Morrissey, pension specialist at Royal London, adds: “Today’s statistics show that while there has been a slight decline in the number of people aged between 16 and 64 in work, the number of people aged over 65 who are still in work continues to grow.
"While this may be partly due to people not having saved enough for retirement it is also an indicator of a more flexible working market where people can continue to work for longer if they want to and this should be welcomed.”
This article was originally written by our sister publication Moneywise.
Subscribe to Money Observer Magazine
Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.Subscribe now