Wages grew at their fastest pace in a decade in the three months to October and the number of people in work has reached a record high, official figures show.
Regular pay, excluding bonuses, grew by an average of 3.3 per cent in the period, up from 3.2 per cent in the three months to September, according to the Office for National Statistics. After adjusting for inflation, regular wages grew 1 per cent in the October period, a level not reached since the final quarter of 2016. Wages have been growing faster than inflation for nine months.
After a decade of wage stagnation analysts said that the tightness of the labour market was beginning to cause sustained pay growth and that consistent rises in real wages were possible. Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “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.
“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.”
The job market remains strong, with employment reaching 75.7 per cent, the highest since records began in 1971. The number of people in work grew by 79,000 to 32.4 million in the three-month period, while unemployment rose by 20,000 to 1.38 million, which remains 49,000 lower than a year ago.
It was the second month running that unemployment rose even with vacancy levels close to a record high. Economists have said that the combination of a high vacancy rate and rising numbers out of work is a sign of skill shortages. The unemployment rate was unchanged at 4.1 per cent, above the 43-year low in August of 4 per cent.
Economic inactivity, which measures the number of people neither working nor seeking work, fell from 21.5 per cent a year ago to 21 per cent. There were an estimated 8.66 million economically inactive people in Britain during the period.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said that the further rise in wage growth had strengthened the case for the Bank of England to raise interest rates at the earliest opportunity after the threat of a no-deal Brexit had disappeared.
“The [monetary policy committee] needn’t panic and raise the bank rate while the economy is visibly slowing due to the risk of a disastrous no-deal Brexit next year. A May rate hike, after a no-deal Brexit likely has been averted, remains a good bet,” he said.
Alok Sharma, the employment minister, said that the latest figures pointed to “the enduring strength of our jobs market, with wages outpacing inflation for the ninth month in a row”. He added: “This is benefiting people across the country, with almost 400,000 more people in work in the last year, putting more money in the pockets of working families, and showing that the UK remains a great place to invest and do business.”