Total pay for employees in Great Britain, including bonuses, fell by 0.2% in real terms between September to November 2016 and September to November 2017, according to research by the Office for National Statistics (ONS).
Its UK labour market: January 2018 report also found that regular pay, excluding bonus payments, fell by 0.5% in real terms, which has been adjusted for consumer price inflation, between September to November 2016 and September to November 2017.
In nominal terms, which has not been adjusted for consumer price inflation, total pay has increased by 2.5% between September to November 2016 and September to November 2017, maintaining the same growth rate recorded between August to October 2016 and August to October 2017. Regular pay, in nominal terms, has increased by 2.4% between September to November 2016 and September to November 2017, compared to a 2.3% growth rate between August to October 2016 and August to October 2017.
Average total pay, including bonuses, was £511 a week in nominal terms before tax and other deductions from pay for employees in Great Britain in November 2017. This compares to £500 a week in November 2016. Average regular pay, excluding bonuses, was £480 a week for British employees in November 2017 before tax and other deductions from pay. This compares to £469 a week in November 2016.
In real terms, average total pay for employees in Great Britain was £489 a week in November 2017, before tax and other deductions from pay. Average regular pay in real terms, excluding bonus payments, was £459 a week in November 2017, before tax and other deductions from pay.
Average total pay for employees in Great Britain, in nominal terms, increased by 35.8% between January 2005 and November 2017, rising from £376 a week to £511 a week. Over the same time period, the Consumer Prices index, including occupiers’ housing costs, increased by 33.7%.
Gerwyn Davies, senior labour market analyst at the Chartered Institute of Personnel and Development (CIPD), said: “With inflation increasing, real wages are struggling to keep up and people will be feeling a squeeze on pay. This is being exacerbated by the fact that employers are proving reluctant to increase wages as a potential response to the tightening labour market, as shown by recent CIPD research.”
Doug Monro, co-founder at Adzuna, added: “Looking at the jobs market through an optimistic lens, it’s likely that UK pay growth in 2018 is set to pick up speed for jobseekers and employees, given the ongoing dark cloud that has sat above UK average salaries. Improving for the first time since 2015, UK salaries currently reside at £32,598, improving for the first time since 2015. With 102,000 more people in work than for June to August 2017, the employment rate has reached a new high of 75.3%, and sets the standard for the UK’s growing and enriched talent pool.”
Ben Brettell, senior economist at Hargreaves Lansdown, said: “With pay growing at 2.5% and inflation running at 3.0%, the squeeze on real wages continues for the ninth consecutive month. But with inflation seemingly set to fall back towards the 2% target, this looks like it’ll come to an end in the next few months. We should remember, however, that the only true driver of real pay growth and rising living standards is productivity growth. This is something the UK has struggled with since the financial crisis, and as yet nobody seems to have solved the puzzle.”