A surge in earnings growth might be even stronger than official data have shown, with British workers enjoying the largest pay rises since the middle of 2008.
Average weekly earnings for the period February to April 2015 were 2.7% higher than the same period last year. This is highest annual growth rate since the three months to February 2009. Analysis by the Resolution Foundation shows that year-on-year growth in regular pay of 2.7 per cent, combined with inflation of -0.1 per cent, means ‘real earnings’ are actually up 2.8 per cent.
Matthew Whittaker, chief economist at the Resolution Foundation, said:
“It’s very encouraging to see wages growing at a faster rate than the pre-crisis norm. Following a deep six-year pay squeeze, a rebound is long overdue.”
According to the Telegraph, minutes of the most recent meeting of the Bank of England’s committee of interest rate setters released on Wednesday said:
“After accounting for the negative impact on average pay levels of the composition of employment growth, [wage growth] could be running at an annual rate somewhat stronger.”
But some analysts warned that the jump in real wages, the highest for seven years, would be short-lived if inflation continued to rise over the rest of the year and productivity remained flat. Matthew Whittaker also commented:
“’Despite the good news though, average earnings remain £30 a week below their pre-crisis peak. And they are around £100 below where they would have been if trend growth had continued uninterrupted. Having taken much longer than expected to arrive, the bounce back in pay may prove short-lived.”
The Guardian has also reported that there has been a leap in wage growth, unemployment fell by 43,000 to 1.81 million, down 349,000 on a year earlier. The jobless rate stood at 5.5% in the three months to April.
The employment minister, Priti Patel, said the figures illustrated how Britain was becoming a more prosperous nation, especially after the rise in the three months to April was fuelled by an increase in full-time work.
“The UK’s employment rate has seen the largest rise of any G7 economy over the last year,” she said.