Total pay for employees in Great Britain, which includes bonuses, increased by 1.3% in real terms between the periods of October to December 2017 and October to December 2018, according to research by the Office for National Statistics (ONS).
Its UK labour market: February 2019 report also found that regular pay excluding bonus payments increased by 1.2% in real terms, adjusted for consumer price inflation, between October to December 2017 and October to December 2018.
In nominal terms, which have not been adjusted for consumer price inflation, both total pay and regular pay increased by 3.4% between October to December 2017 and October to December 2018.
Matt Weston, managing director at Robert Half UK, said: “This war for talent is reflected in the most recent wage growth figures, which show a rise well above the current level of inflation. This trend is set to continue as employers look to plug a widening skills gap in the race to adapt to an increasingly digitised business landscape, which is already dramatically disrupting traditional business models and roles.”
Average total pay for employees in Great Britain was £527 a week in nominal terms before tax and other deductions from pay in December 2018. This compares to £512 a week in December 2017. Average regular pay, excluding bonus payments, was £495 a week in nominal terms for British employees in December 2018, before tax and other deductions. This compares to £480 a week in December 2017.
Pawel Adrjan, UK economist at Indeed, added: “A year ago, the average Briton’s spending power was stagnating, as pay packets were caught in the crosshairs of low wage growth and painfully high inflation. Now, as inflation slows to its lowest rate in two years, a series of strong rises in average wages has swelled both pay packets and [employees’] spending power.
“Rising wages are a byproduct of Britain’s relentlessly tight labour market, which is still bumping along the ceiling of full employment. With the proportion of working age people who have a job remaining at the highest level ever recorded, employers are being forced to crank up wages to prise recruits away from other jobs.
“With economic growth slowing, wage demands rising and continued uncertainty about future migration policy, these are testing times for Britain’s employers.”
Ben Keighley, director at SociallyRecruited.com, said: “The cage door remains open and real wage growth is continuing to make up for lost time as the good times roll on for British [employees]. The running joke that was a sluggish trajectory for take home pay, despite low unemployment, is a distant memory.
“A tight labour market has been a headache for employers for a while, but this finally appears to be translating into sustained wage increases.
“Not only are [European Union employees] leaving Britain faster than ever, but unemployment levels are at their lowest in nearly half a century. Now that wages have started down a healthier path, future increases are likely to become somewhat of a self-fulfilling prophecy as employers turn to pay to compete with each other and lure talent away from their competitors.”