Total pay increases by 2.8%

money, pound coins

Total pay, including bonuses, increased by 2.8% for employees in Great Britain between September-November 2015 and September-November 2016, according to the Office for National Statistics (ONS).

Its UK labour market: January 2017 report also found that regular pay increased by 2.7% in nominal terms between September-November 2015 and September-November 2016. This compares to growth of 2.6% between August-October 2015 and August-October 2016.

Average regular pay in nominal terms, excluding bonuses and before tax and other deductions, was £477 a week for employees in Great Britain in November 2016. This is an increase from £465 a week in November 2015.

Average total pay, including bonuses, rose from £495 a week in November 2015 to £509 a week in November 2016.

In nominal terms, total pay increased by 63.4% from £312 a week in January 2000 to £509 a week in November 2016. Over this period, the Consumer Price Index increased by 41%.

In real terms, adjusted for consumer price inflation, total pay increased by 1.8% and regular pay increased by 1.7% between September-November 2015 and September-November 2016.

Rachel Smith, principal labour market economist at the Confederation of British Industry (CBI), said: “The high levels of employment our flexible labour market generates remains a mainstay of the UK economy, and will be key to making a success of Brexit.

‚ÄúHowever, pay growth is likely to be eroded by increasing inflation during this year, underlining the need for a regionally-focussed industrial strategy that powers the productivity growth that will enable wages to rise more swiftly.‚ÄĚ

Gerwyn Davies, labour market adviser at the Chartered Institute for Personnel and Development (CIPD), added: “Against a backdrop of relatively strong economic activity and a high number of vacancies, the abrupt slowing of employment growth suggests that employers may be facing increased difficulty with finding suitable candidates. However, the data suggests that this is a labour shortage rather than a skills shortage, with wholesale and retail alone accounting for one in five vacancies. Recruitment difficulties are perhaps no surprise given the underlying trend in employment and unemployment; but part of the explanation could lie in the recent sharp slowdown in the supply of EU nationals.

“At the same time, pay continues to nudge up. It thus remains to be seen how much leeway employers have to raise pay and improve employment conditions to attract more UK applicants to apply for low- to medium-skilled vacancies.

‚ÄúOverall, the figures point to potential warning signs, but still some underlying resilience; marked by a slowing down in hiring and moderate pay growth that looks set to be caught up by sharply rising price inflation. The UK economy has shown remarkable elasticity since the referendum vote, and these figures suggest that the labour market is adjusting to its dizzying heights rather than deteriorating.‚ÄĚ