Welcome strengthening of pay growth following introduction of National Living Wage

Real wage growth strengthened in recent months, driven in part by the welcome pay boost delivered by the new National Living Wage, the Resolution Foundation said today (Wednesday) in response to the labour market statistics.

Real earnings growth increased to 1.9 per cent in the three months to April, bucking the recent trend of weakening pay growth. While the stronger than expected picture on pay owed something to historic data revisions, the National Living Wage – which came into effect on 1 April – will also have had an important influence.

Unemployment fell to its lowest level in a decade, while the headline employment rate has been essentially flat since October last year. The Foundation says that it is encouraging to see the jobs market remain resilient in the face of uncertainty surrounding the EU referendum.

However, it adds that a new approach will be needed to secure further substantial increases and move the UK towards full employment.

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said:

“It’s encouraging to see real wage growth strengthening this month, after a period in which the earnings outlook had weakened. The introduction of the National Living Wage is likely to have contributed to this by delivering a welcome pay boost to millions of low earners in recent months.

“The jobs market is displaying remarkable resilience in the face of wider economic uncertainty, with unemployment falling to its lowest level in over a decade.

“But with employment essentially flat for the last six months, it looks like we’ve reached the limits of our jobs recovery. A new approach will be needed to take Britain closer to full employment.”