The end of 2019 saw average weekly wages reach their highest since pre-2008 economic crisis levels, but pay growth has since slowed down.
That is according to the latest labour market figures from the Office for National Statistics, which revealed average real-terms regular pay, excluding bonuses, increased to £474 in the three months to December 2019. This was just £1 above the pre-economic downturn peak recorded in March 2008 and 1.8% higher than the average pay seen in October to December 2018.
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However, growth in average weekly pay excluding bonuses dropped to 3.2% in the three months to December, down from 3.4% in the three months to November. Growth in total wages, which include bonuses, fell to 2.9% from 3.2% a month earlier.
The ratio of private sector total pay to public sector total pay was 0.99 – almost equal. Total average weekly earnings for the public sector increased by 3.3% to £550 in the year to December 2019, while earnings for private sector employees grew by 2.7% to £542.
Myrto Miltiadou, ONS deputy head of labour market statistics, said: “In real terms, regular earnings have finally risen above the level seen in early 2008, but pay including bonuses is still below its pre-downturn peak.”
The number of people in employment reached a record high of 32.93 million. Between October and December 2019, employment increased by 336,000, a 1% increase on the figure recorded the previous year. Over the same period, unemployment reduced by 73,000 (5.4%) to 1.29 million.
This growth was mainly driven by the “transformation of the women’s labour market”, the ONS indicated, with the number of women in jobs increasing by 150,000 to a record high of 15.61 million in the three months to October to December 2019.
Tony Wilson, director of the Institute for Employment Studies, said the outlook for the labour market in 2020 seemed positive, despite subdued earnings growth last month and signs that vacancies were increasing.
However, the figures showed less positive progress in employment for some groups. Just 54% of disabled people were in work, compared with more than 82% without an impairment, while the gap in the employment rates of white people and ethnic minority groups has grown.
Wilson said: “Another group missing out on the recovery has been those with health conditions, and perhaps the most worrying sign in today’s figures has been a continued growth in economic inactivity due to long-term ill health – which now stands at 2.08 million, up from two million a year ago.
“With nearly two million inactive people stating that they want to work, unemployment at record lows and an increasingly tight labour market, how we support those furthest from work will be an increasing economic and social priority in the year ahead.”
Gerwyn Davies, senior labour market adviser for the CIPD, said more people were taking advantage of the buoyant jobs market by setting up their own businesses and employing people to work for them. There was a net flow of 60,000 people from employee status to self-employment status between July to September 2019 and October to December 2019.
“It seems that the tightening labour market is enabling more workers to structure work around their lifestyles and responsibilities, which is undoubtedly helping support such sharp increases in employment growth,” he said.
With nearly two million inactive people stating that they want to work, unemployment at record lows and an increasingly tight labour market, how we support those furthest from work will be an increasing economic and social priority in the year ahead,” – Tom Wilson, Institute for Employment Studies
The hiring market is likely to remain competitive for employers, suggested Robert Half UK managing director Matt Weston, even with the start of the year being a key time for employees considering new work opportunities.
“According to our 2020 Salary Guide, 41% of business leaders are concerned about their ability to attract and retain talent over the coming year, demonstrating the importance of evaluating employee remuneration packages and wider incentives now more than ever,” Weston said.
Sophie Wingfield, head of policy at the Recruitment and Employment Confederation, said businesses were pressing on with recruitment plans they had previously been cautious about and urged the government to implement an “evidence-based” immigration system that allowed them to recruit from sectors where skills are in short supply.
Last week, Downing Street said the new points-based immigration system will be implemented from 1 January 2021.