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UK Employment Figures, January 2018: Strong Employment Gains but Continued Weak Wage Growth


The ONS's first labour market statistics release of 2018: good news for job creation, bad news for real wage growth.

The first labour market statistics release of 2018 from the ONS shows the UK’s labour market continues to create jobs, but also continues to struggle on wage growth.  

First the good news: for the three months to November 2017, the number of people in work increased markedly, with 102,000 more people employed than the previous quarter. Furthermore, the unemployment rate stayed at a historical low of 4.3%. These numbers set a new high water mark for the labour market in Britain, with a record 32.21 million people in work in the three months to November 2017.  

The bad news is that real wages continued their downward slide — average weekly earnings adjusted for inflation fell by 0.2% (with bonuses, 0.5% excluding bonuses) compared to the same period last year.


The addition of such a surprisingly high number of new jobs proves the UK the jobs boom isn’t over yet, but the economy’s ability to keep creating new jobs is waning. The employment rate is at a record high 75.3%,  the unemployment rate is at a record low of 4.3%, and employers are reporting challenges finding workers to fill roles. It takes two to tango, and with more UK workers eyeing jobs in the EU and fewer EU workers interested in UK-based roles, employers who want to hire may continue to face difficulties finding talent.  

Time to ask for a raise?

In a tight labour market, why aren’t real wages rising? Ten months on from the triggering of Article 50, the wage-sapping surge in inflation is a side effect of the fall in the Pound – which may be due to the uncertainty triggered by Brexit – but the deeper issue is the UK’s stubbornly low productivity.

British labour productivity is growing at its slowest pace for nearly two centuries, and while this problem isn’t unique to the UK, Britain’s worrying combination of stagnant productivity and falling real wages is.

Today’s reported modest increase in average salaries – up just 2.4% (excluding bonuses) on the same time last year – means real wage growth remains tantalisingly out of reach for millions of Britons. Even though consumer price inflation eased in December, workers’ paypackets are still not keeping up.

While many of us made ‘get a pay rise’ a New Year’s Resolution, research by Indeed has revealed that men are much more willing than women to ask their employer for a raise. Our study also found women are three times more likely than men to report being too embarrassed to ask for a pay increase. Today’s numbers suggest that it might be a good time for many to ask for a raise.  

Along with the UK, the US and Australia are also facing weak growth in wages, but lower inflation in these countries mean that they’re not experiencing the purchasing power declines seen in Britain. Slow productivity growth is a global challenge, but Britain stands out for the hit it took to productivity in the global financial crisis as well as the slow growth since 2007.

The roots of Britain’s productivity problem – which is the underlying reason for the slow wage growth and a serious speed bump for the economy – run deeper and cannot be blamed on Brexit alone.