UK Employment Figures, April 2018: Welcome Back, Real Wage Growth!
Oil tankers turn faster, but the average Briton’s paypacket has finally changed direction.
Almost a year after wages began falling in real terms, people’s pay rises are finally outpacing inflation again according to new data out today from the ONS.
With this improvement, the narrative of the UK’s labour market is shifting too. After years of consistent job creation, the employment rate is at the highest level on record – and the UK economy’s ability to keep generating new jobs is waning. As we approach full employment, average wages are slowly being driven upwards.
While employer demand remains strong, in some sectors there aren’t enough jobseekers to go around; and this tightness in the labour market is forcing up wages as employers compete with each other for the best talent. The unemployment rate is now just 4.2%, the lowest rate seen in Britain since 1975.
At the same time, paypackets are going further thanks to the strengthening Pound, which is making imports cheaper and taking the sting out of inflation.
While no-one should confuse this small improvement in real wages with a sudden rebound in the UK’s economic fortunes, it’s still a welcome development. At the same time, improvements in Britain’s productivity levels could help consolidate these gains further.
Modest though it is, this is an important first step on the road to stronger wages and a properly functioning labour market.
Tara Sinclair is an associate professor of economics and international affairs at the George Washington University and a senior fellow of the Indeed Hiring Lab. She has a PhD in economics from Washington University in St. Louis and her research focuses on modeling, explaining, and forecasting trends in the labor market and other macroeconomic variables both in the US and worldwide. For the Hiring Lab, Tara is working on research projects using Indeed’s unique data to develop new insights into the labor market.