By Lyndsey Hall
According to figures from the Office for National Statistics (ONS), wages grew by 2.9% in the three months to July, well above the rate of inflation.
Wages grew faster than expected, outstripping rising prices. In addition, unemployment continued to fall, dropping by 55,000 to 1.36 million. The jobless rate remained at 4%, its lowest level for over 40 years. The number of people in work also remained steady at 32.4 million.
Despite the fact average earnings have dropped £13 per week since 2008, earnings have now outstripped inflation for several months. The inflation rate for the three-month period to July was 2.4%, with the rate for just July slightly higher at 2.5%.
The ONS said the labour market remained “robust” with the number of people in work “still at historically high levels”. Head of labour market statistics, David Freeman said, “With the number of people in work little changed, employment growth has weakened. Meanwhile, earnings have grown faster than prices for several months, especially looking at pay excluding bonuses.”
Andrew Wishart, UK economist at Capital Markets, said the figures indicated that “competition for workers is finally starting to provide greater support for wages”. However, he doesn’t expect this to prompt an interest rate rise from the Bank of England.
“We still think that the MPC will hold off raising interest rates again until the near-term uncertainty due to the Brexit negotiations is resolved.”
The Bank of England raised its key interest rate for only the second time in almost a decade last month, the current rate of 0.75% is the highest since March 2009.
The ONS also said job vacancies rose by 14,000 in the period to July, up to 833,000 – a record high. Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said this was “alarmingly high” and “further evidence of persistent skills shortages”.
“While the number of people in work stands close to historic highs, firms continue to report that attempting to recruit staff with the right skills is an increasingly uphill struggle, which is stifling their ability to grow and boost productivity.”
With the growing prevalence of artificial intelligence also threatening the workforce, it has never been more crucial for workers to upskill, or risk being left behind as computers and robots change the world of work.
What are your thoughts on the current issues facing employers and their staff? Has your business seen an increase in wages in recent months? We’d love to hear from you, leave a comment or join the conversation on Twitter.