UK wages rose 3.2 per cent in the year to March, slightly down from a 3.5 per cent rise in the month before, data showed today as the unemployment rate hit an almost 45-year low.
Average weekly earnings climbed 1.3 per cent year on year when adjusting for inflation, the Office for National Statistics said today.
Meanwhile the employment rate remained the joint-highest on record at 76.1 per cent.
The unemployment rate stood at just 3.8 per cent, its lowest since October to December 1974.
Wages remain economic bright spot
Including bonuses, wage growth rose 3.2 per cent between January and March compared to the same period last year, or 3.3 per cent excluding bonuses.
That equated to a weekly wage of £498 per week, compared to £483 in early 2018, or £465 per week in 2015 prices.
However, wages remain £8 lower than the £473 per week recorded in March 2008 before the financial crisis.
Nevertheless, earnings remain the “bright spot of the UK economy”, according to Tom Stevenson, investment director for Personal Investing at Fidelity International.
“The extension of Brexit uncertainty may have played a part in today’s 3.3 per cent rise,” he added.
“The murky outlook is leading businesses to hire now with the option to fire later rather than make irreversible investments in new kit.”
But he added that ahead of next week’s inflation data “there’s a question mark over how real the earnings growth is”, with higher salaries set to lead to price rises.
Employment rate shows ‘Brexit resilience’ of UK economy
Employment minister Alok Sharma welcomed the joint-record employment rate as evidence of the Tories’ “balanced approach” to the economy.
“We now need to shift some of our focus to up-skilling people and supporting them into roles with real career progression to create a modern workforce fit for the challenges of the 21st century,” Sharma added.
Ben Brettell, a senior economist at Hargreaves Lansdown, questioned how low the unemployment rate could fall as it hit a low not seen since 1974.
“The UK labour market has been remarkably resilient in the face of Brexit-related uncertainty,” he added. “These are really strong numbers given the headwinds the economy is currently facing.”
However, productivity fell again as output per hour fell for the third quarter in a row, this time by 0.2 per cent between January and March compared to three months before.
Output per worker grew 0.7 per cent over the quarter but Brettell warned the “British disease” of low productivity is not going away as firms prioritise cheap hiring over technology investment.
“There are valid concerns that UK firms are hoarding labour instead of much-needed capital expenditure,” he said. “Why would you invest large sums in new plant or machinery in such uncertain times, when you could hire an extra worker and get broadly the same result?”