Britain has passed a living standards landmark with real pay finally growing again after a 12-month squeeze. And there are was more good news in the jobs market as unemployment fell and employment hit a record high, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market figures.

Real (CPIH-adjusted) average weekly earnings grew by 0.2 per cent in the three months to February – the first period of positive pay growth since the pay squeeze began in February 2017. The Foundation expects real pay growth to strengthen over the coming months as wage pressures grow and inflation pressures abate.

It cautions however that real pay growth is likely to remain weak, and pay pressures will play out differently across the economy. Real pay has been rising by almost 2.8 per cent for those in finance for the past year, and 1.5 per cent for those in construction, yet the squeeze continues in the public sector.

It adds that Britain has a lot of ground to make up on pay, with average annual earnings still almost £800 a year lower than they were a decade ago.

There was more encouraging news in the jobs market as unemployment fell to 4.2 per cent – its lowest level since May 1975. Employment hit a new record high of 75.4 per cent, and has been at close to a record high for the last eight months.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:

“Today’s figures confirm that Britain passed an important living standards milestone in early 2018 as its 12-month pay squeeze finally ended. Wages should continue to strengthen over the course of the year as inflation falls back.

“It’s good to see pay finally back in positive territory, but Britain has a lot of ground to make up after an awful decade of pay squeezes, stagnation and all too fleeting recoveries. On average, people are still taking home less than they did before the crisis.

“Britain’s booming jobs market has been the antidote to its wage woes, and there were more encouraging signs today as unemployment hit a fresh low. This should increase wage pressure, though ultimately productivity gains will be needed for sustainable pay growth.





Rebecca joined the HRreview editorial team in January 2016. After graduating from the University of Sheffield Hallam in 2013 with a BA in English Literature, Rebecca has spent five years working in print and online journalism in Manchester and London. In the past she has been part of the editorial teams at Sleeper and Dezeen and has founded her own arts collective.