Real average weekly earnings grew by 1.7 per cent in the three months to May 2019 – its fastest rate in over three years – as pay packets continued their long journey back to pre-recession levels, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market data.
Nominal regular pay increased by 3.6 per cent, its fastest rate since July 2008, and by 1.7 per cent in real terms, its fastest rate since October 2015 (when inflation was near zero). The increasing pace of wage growth is much needed, says the Foundation, given that real average earnings remain £5 a week lower than their 2008 peak.
While employment was down slightly at 75.6 per cent – its first fall in over a year – unemployment remained at its lowest level since 1974 at 3.8 per cent. The steadying of employment data and growing pay pressure over recent months suggests that a tight labour market is starting to take effect, says the Foundation.
Nye Cominetti, Economic analyst at the Resolution Foundation, said:
“Pay packets strengthened in the three months to April, helped in part by the 4.9 per cent increase in the National Living Wage that boosted the pay of around two million workers.
“With real average earnings still £5 a week lower than its peak over a decade ago, it’s important that pay growth continues to head back towards its pre-crisis average of over 2 per cent.
“While a tight labour market will take us some of the way towards a healthy pay recovery, ultimately we are going to need far stronger growth in productivity to get us there.”