Total pay for employees in Great Britain, which includes bonuses, increased by 1.5% in real terms between November 2017 to January 2018 and November 2018 to January 2019, according to research by the Office for National Statistics (ONS).
The Average weekly earnings in Great Britain: March 2019 report also found that regular pay excluding bonus payments increased by 1.4% in real terms, namely adjusted for consumer price inflation, between November 2017 to January 2018 and November 2018 to January 2019.
In nominal terms, which have not been adjusted for consumer price inflation, both total pay and regular pay increased by 3.4% between November 2017 to January 2018 and November 2018 to January 2019.
Jon Boys, labour market economist at the Chartered Institute for Personnel and Development (CIPD), said: “The outlook for living standards is positive. Nominal pay growth has stayed the same, but with a fall in inflation, real pay growth has increased.
“In the face of Brexit uncertainty, businesses may be employing more people to reach demand instead of making investments in plants and machinery. The latter is needed for long-term productivity growth. As ever, the official figures lag and as we get closer to Brexit, the date of departure will soon fall within businesses’ recruitment planning horizon. At this point, many may hold steady so we might expect less rosy results in the coming months.”
Average total pay for employees in Great Britain was £530 a week in nominal terms before tax and other deductions from pay in January 2019. This compares to £684 a week for staff working within the finance and business services sector and £357 a week for those employed in wholesaling, retail, hotels and restaurants.
Between November 2017 to January 2018 and November 2018 to January 2019, average total pay for finance and business services roles increased by 4.3%, versus a 2.4% increase for the wholesaling, retail, hotels and restaurants sectors.
Kate Smith, head of pensions at Aegon, added: “Pay has been outstripping inflation for over a year and gives individuals greater bandwidth to save any additional income for later life; this is timely, given that auto-enrolment pension contributions are about to increase. Even a small amount saved today could have a significant impact on a retirement pot in the future.”
Average regular pay, excluding bonus payments, was £497 a week in nominal terms for British employees in January 2019, before tax and other deductions from pay. This compares to £480 a week in January 2018. Average regular pay in real terms equates to £466 a week.
Ben Frost, solution architect, Europe, Middle East and Africa (EMEA) at Korn Ferry, said: “Not all businesses are in the financial position to offer monetary rewards to attract and retain top talent. However, for the most part, employees’ expectations have begun to shift, and so money is no longer necessarily the most effective way of rewarding staff or appealing to new talent.
“[Organisations] need to look at benefits beyond financial incentives in order to attract the best talent. From flexible working schemes for a better work-life balance, to robust career development programmes and creative working environments, employers need to communicate the benefits associated with their brand.
“With this change in focus, organisations are able to attract and retain the best talent and so combat the current skills shortage that is affecting many industries.”