Jobs growth is strengthening but pay recovery risks running out of steam, says the Resolution Foundation
Employment might have hit a new, record high, but real pay growth has fallen to its lowest level since February 2015, according to the Resolution Foundation (RF).
The overall employment rate has hit another record high (74 per cent), with strong growth recorded in both full-time jobs and self-employment, which is at its highest ever level (4.62 million). But the welcome news on employment has been tempered by a further slowdown in the UK’s pay recovery, with real (regular) earnings growth falling to 1.9 per cent, claims the RF in response to the latest ONS labour market statistics published yesterday (Wednesday, January 20). It say this is the slowest growth rate since February 2015 and below the pre-crisis average of 2.2 per cent.
The RF says that with inflation now rising and set to increase further in the coming months, fresh impetus will be needed to maintain momentum in the UK’s pay recovery.
It claims that despite its impressive jobs record, the UK remains some way short of being a genuine world leader on employment. Further progress will be needed – particularly among BAME and disabled people, the low-qualified and other groups whose employment prospects vary hugely across the country – in order to make the Chancellor’s laudable goal of securing full employment a reality.
Laura Gardiner, senior policy analyst at the RF, which works to improve living standards in Britain, said: “The UK jobs market continues to strengthen, with strong growth in both full-time jobs and self-employment.
“But while recent employment trends are very positive, the UK’s pay recovery risks running out of steam. Real earnings growth has fallen back below its pre-crisis trend, even while inflation remains close to zero.
“One of the key economic tests for 2016 is whether the early signs of a productivity recovery will strengthen enough to offset rising inflation and put the UK’s pay recovery back on track.”