Strong U.K. Wage Growth Continues Amid Tight Labor Market

Tuesday, 14 May 2019 15:53 WIB

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British workers are enjoying a resurgence of bargaining power as labor shortages leave employers struggling to fill jobs.

Basic pay rose an annual 3.3% in the first quarter, close to the fastest pace since 2008, Office for National Statistics figures published Tuesday show. Pay including bonuses rose 3.2%. Wage growth was less than 3% a year ago.

The increase came as the number of people in work rose by 99,000, taking the jobless rate to a 44-year low of 3.8%. The employment rate stayed at a record high of 76.1%.

A buoyant labor market helps to explain the resilience of consumer spending, which along with Brexit stockpiling drove the economy last quarter. Wage growth is now easily outpacing inflation, which averaged less than 2% between January and March.

Companies are failing to increase productivity at the same pace, however, with figures Tuesday showing that output per hour was 0.2 percent lower than a year earlier. The result is that unit labor costs, a measure of domestically generated inflation watched by Bank of England rate setters, are accelerating.

There was some good news for firms facing labor shortages as the number of EU nationals working in the U.K. rose to a record-high of 2.38 million, up 98,000 from a year earlier. The rise was primarily driven by Bulgarians and Romanians, with little increase among citizens of older EU countries and those that joined in 2004.

Employment has been fuelled by a sharp fall in economic inactivity. The growth has been driven by full-time work, and was especially strong among women and the over-50s. While the increase last quarter marked a slowdown from the stellar gains seen around the turn of the year, it may have been partly due to a lack of suitable candidates.

Source : Bloomberg


  • U.K. GDP was flat in the three months ending October, the Office for National Statistics said Tuesday. There were increases across the services sector, offset by falls in manufacturing with factories...



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