Regular pay for employees in Great Britain, excluding bonuses, fell by 0.2% in real terms between November 2016 to January 2017 and November 2017 to January 2018, according to research by the Office for National Statistics (ONS).
Its UK labour market: March 2018 report also found that total pay, including bonus payments, remained unchanged in real terms, which has been adjusted for consumer price inflation, between November 2016 to January 2017 and November 2017 to January 2018.
In nominal terms, which has not been adjusted for consumer price inflation, total pay has increased by 2.8% between November 2016 to January 2017 and November 2017 to January 2018, which is higher than the 2.7% growth rate recorded between October to December 2016 and October to December 2017. Regular pay, in nominal terms, has also increased by 2.6% between November 2016 to January 2017 and November 2017 to January 2018, compared to a 2.5% growth rate between October to December 2016 and October to December 2017.
Average total pay, including bonuses, was £514 a week before tax and other deductions from pay for employees in Great Britain in January 2018. This compares to £500 a week in January 2017. Average regular pay, excluding bonuses, was £482 a week for British employees in January 2018 before tax and other deductions from pay. This compares to £469 a week in January 2017.
In real terms, average total pay for employees in Great Britain was £488 a week in January 2018, before tax and other deductions from pay. Average regular pay in real terms, excluding bonus payments, was £459 a week in January 2018, before tax and other deductions from pay.
Average total pay for employees in Great Britain, in nominal terms, increased by 36.5% between January 2005 and January 2018, rising from £376 a week to £514 a week. Over the same time period, the Consumer Prices Index, including occupiers’ housing costs, increased by 33.5%.
Ian Brinkley, acting chief economist at the Chartered Institute for Personnel and Development (CIPD), said: “The pay picture is looking brighter, as pay continues to climb steadily. Against a backdrop of falling inflation, it is likely that real wage growth will turn positive next month, providing a long-awaited boost to [employees] across the country after a seemingly endless period of wage stagnation.”
Laith Khalaf, senior analyst at Hargreaves Lansdown, added: “Wage growth still isn’t quite beating inflation, but both pay and prices now appear to be moving in the right direction for UK consumers. However there are a number of competing factors which muddy the short-term picture for wages. The collapse of Carillion and the continued problems [faced] by high street outlets will act as a constraint on further progress in the labour market. An increase in compulsory pension contributions for employers due in April will also divert more reward resources into long-term retirement plans, which may come at the expense of pay in the here and now.
“On the other hand, the national living wage will be ratcheting up too, which should help to boost wages. And looking a bit further out any new settlement on NHS pay increases will act as a significant shot in the arm for wage growth, particularly if it is rolled out across the public sector.
“If the current momentum in wage growth can be maintained, things are looking up for UK consumers and the economy. However this rosier picture will give the Bank of England more confidence in raising interest rates, which would go some way to limiting any economic windfall for borrowers.”