Total pay for employees in Great Britain, including bonuses, fell by 0.3% in real terms between October to December 2016 and October to December 2017, according to research by the Office for National Statistics (ONS).
Its UK labour market: February 2018 report also found that regular pay, excluding bonus payments, also fell by 0.3% in real terms, which has been adjusted for consumer price inflation, between October to December 2016 and October to December 2017.
In nominal terms, which has not been adjusted for consumer price inflation, total pay has continued to increase by 2.5% between October to December 2016 and October to December 2017, maintaining the same growth rate recorded between September to November 2016 and September to November 2017. Regular pay, in nominal terms, has also increased by 2.5% between October to December 2016 and October to December 2017, compared to a 2.3% growth rate between September to November 2016 and September to November 2017.
Average total pay, including bonuses, was £512 a week in nominal terms before tax and other deductions from pay for employees in Great Britain in December 2017. This compares to £498 a week in December 2016. Average regular pay, excluding bonuses, was £481 a week for British employees in December 2017 before tax and other deductions from pay. This compares to £469 a week in December 2016.
In real terms, average total pay for employees in Great Britain was £488 a week in December 2017, before tax and other deductions from pay. Average regular pay in real terms, excluding bonus payments, was £459 a week in December 2017, before tax and other deductions from pay.
Average total pay for employees in Great Britain, in nominal terms, increased by 36.1% between January 2005 and December 2017, rising from £376 a week to £512 a week. Over the same time period, the Consumer Prices Index, including occupiers’ housing costs, increased by 34.1%.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Wages are heading in the right direction, though the rate of growth is hardly jaw-dropping, and significantly still lags behind the rate of inflation. That means the consumer squeeze is still alive and well, and the pick-up in wage growth anticipated by the Bank of England is yet to materialise.”
Crowley Woodford, employment partner at Ashurst, added: “Although average earnings have slightly increased it is clear that overall the squeeze on [employee] pay persists. Employers continue to lack confidence in the longer-term future, [while] feelings of job insecurity remains amongst [employees]. This dampens the pressure on employers to offer higher pay and employee representative bodies demand it.”
Ian Brinkley, acting chief economist at the Chartered Institute for Personnel and Development (CIPD), said: “The strengthening of wage growth is a welcome sign as, when coupled with likely falls in inflation, it opens up the possibility of real wage growth in the coming months, which will be a great relief to those [employees] who have seen their pay packets squeezed for months on end.”