In the world of UK employment, conversations about stagnant wage rates compared to the increased ‘cost of living’ have become the norm. But not for much longer, says the Office for National Statistics.
Why? Because finally, wages are increasing for workers. With the ONS reporting that total pay rates have reached their highest level for ten years.
According to these statistics, employee wage rates have not looked so good since 2008, (just before the global recession hit).
Their collated statistics show improved wage rates in the three months to November 2018. The Office for National Statistics has reported average weekly earnings growth of 3.4% over the period compared to a year earlier.
But why is this happening? And why now?
On the UK’s economic stage, indecision about the outcome of the Brexit deal is leading the British Pound on a rollercoaster ride in terms of valuation. Further to this, opinions are constantly being circulated about how the UK economy will be affected in the long-term should a ‘no-deal’ be reached. These uncertainties also extend to the employment economy, where there are widespread concerns about how employers can attract and retain staff from Europe.
The labour economy fights on
Considering all this, doesn’t the fact that employee wages are rising despite the impact Brexit uncertainties are having on the UK economy seems odd?
It does, but the reason why this is happening is obvious. The UK labour market is streamlining as EU workers are less confident about their employment future in the UK. So this decrease in employment demand is driving up wages.
So, it appears that the British labour market is holding out against the paralysing powers of Brexit, and Stephen Clarke from the employment think tank, The Resolution Foundation, seems to agree:
“While Brexit uncertainty and political paralysis are having a cooling effect on the wider economy, the labour market is proving more resilient. Britain’s tightening jobs market is delivering stronger pay rises, particularly for workers in ICT, hospitality, and real estate.” – Stephen Clarke, The Resolution Foundation
“2019 looks set to be a far better year for pay than this one. But after a pretty appalling decade, Britain remains some way off a return to the levels of real pay we enjoyed before the crash,” Clarke continues.
The ONS has also said that levels of employment are at record levels, currently at 32.5 million – which is rising by 141,000. Further to this, unemployment rates have fallen from 4.1% to 4% – which is its lowest level since 1975.
Impressive growth or simply better than a recession?
But is this real and impressive wage growth? Or does it just appear positive compared to the dire state of wages following the global recession in 2008?
– Perhaps we all just got too used to the saturated employment market post-2008, including the relative ‘lack of jobs’ and stagnant wage rates, that any sign of improvement from this decade long slump looks impressive? Well readers, watch this space and let’s see if employment wages continue to grow post-Brexit, whatever deal may come…