Pay pressure continues to build in low-paying sectors of the economy

Published on Jobs, Skills and Pay

Nominal pay growth rose to 3.3 per cent – with growth strongest in hospitality, real estate and ICT – and employment returned to a joint record high of 75.7 per cent as Britain’s labour market continued to shrug off wider uncertainty about the economy this Autumn, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market data.

The further strengthening of pay growth in the three months to October suggests that 2019 could be a better year for pay rises than this year, says the Foundation. However, with real wages growing by just 1 per cent – less than half the pre-crisis norm of 2.2 per cent – the long overdue rebound on pay can’t come soon enough.

The Foundation notes that real wage growth is strongest in hospitality, real estate, ICT, wholesale and health and social work, where it is at or above 2 per cent. This suggests that a tight labour market is starting to deliver stronger pay growth, with workers in low paying sectors also benefiting from further rises in the National Living Wage.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:

“While Brexit uncertainty and political paralysis are having a cooling effect on the wider economy, the labour market is proving more resilient. Britain’s tightening jobs market is delivering stronger pay rises, particularly for workers in ICT, hospitality, and real estate.

“2019 looks set to be a far better year for pay than this one. But after a pretty appalling decade, Britain remains some way off a return to the levels of real pay we enjoyed before the crash.”