Real wage growth has finally returned to pre-referendum levels, though the post-referendum pay slump has left average workers £12 a week worse off, the Resolution Foundation said today (Tuesday) in response to the latest labour market figures.
Though nominal wage growth fell slightly to 3.4 per cent in the three months to February, easing inflation has led to real pay growth of 1.5 per cent, a rate not seen since the run-up to the referendum.
The Foundation says that while this uptick is welcome, nominal pay growth will need to strengthen further if Britain’s pay recovery is to be maintained. Inflation is expected to rise over the next few months as the temporary fall in energy costs gives way to domestically-generated price rises.
The Foundation adds too that that there is plenty of ground to make up, with the post-referendum pay slump leaving individuals £12 a week worse off compared to if growth rates had remained at the level seen in June 2016.
This news comes alongside further evidence that the jobs market remains resistant to Brexit-related uncertainty. The employment rate remained steady at 76.1 per cent, after hitting a record high in January, with unemployment at 3.9 per cent.
Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:
“Real wage growth has finally returned to pre-referendum levels, though the post-referendum pay slump has left us £12 a week poorer.
“This mini pay recovery is encouraging, but it is likely to be tested in the coming months as inflation is expected to start rising again.
“Brexit uncertainty has not caused businesses to put hiring plans on hold – quite the opposite. But it has caused firms to put investment on hold, which may in turn affect productivity and the strength of pay growth in the longer term.”