Wages have grown at a higher rate than inflation to an 11-year high, figures from the Office for National Statistics (ONS) show.
Towards the end of 2019, wages had grown at an annual rate of 3.9%, whilst the inflation rate was 2%.
This is compared to 2018, when wages grew at an annual rate of 2.9% in the 3 months to March and the inflation rate was 2.7% over the same period
The reason behind the rise was the irregular timing of the annual pay rise for public health workers in 2018, when a much greater increase was deferred until July.
It was estimated that employment was at 76.1% – the highest rate since records began.
The Office for National Statistics reported that 32.81 million people were in employment. That’s 425,000 more than a year earlier and was largely down to more people working full-time.
These rising levels of employment are being driven by women, who’s level of employment has risen to 72.1%, the highest it has ever been.
At the same time, men’s employment level dropped to 80.1%, which was slightly lower than the previous 3 month period.
Ian Stewart, chief economist at Deloitte, said:
“The days of sharply falling unemployment are behind us, but a tight labour market points to further gains in wages and spending power. Despite a second quarter decline in growth, the UK economy still has momentum.“
Chancellor Sajid Javid said:
“Every person deserves the chance to succeed and provide for their families through a steady income.
Today’s figures are another sign that despite the challenges across the global economy, the fundamentals of the British economy are strong as we prepare to leave the EU.”
The Effect of Coronavirus on Wage Growth
Although wage growth continuing to rise over the next three years seemed somewhat possible once Brexit enters full swing, it’s safe to say that the coronavirus crisis has scrapped all prior predictions.
The future of wage growth and inflation is still unclear, though an increase in wage growth seems unlikely with government talks of freezing wages of public sector workers.
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