Total pay for employees in Great Britain, including bonuses, increased by 0.2% in real terms between March to May 2017 and March to May 2018, according to research by the Office for National Statistics (ONS).
Its UK labour market: July 2018 report also found that regular pay, excluding bonus payments, increased by 0.4% in real terms, having been adjusted for consumer price inflation, between March to May 2017 and March to May 2018.
In nominal terms, not having been adjusted for consumer price inflation, total pay increased by 2.5% between March to May 2017 and March to May 2018. This compares to a 2.6% recorded growth rate between February to April 2017 and February to April 2018.
Regular pay, in nominal terms, increased by 2.7% between March to May 2017 and March to May 2018. This is lower than the 2.8% growth rate recorded between February to April 2017 and February to April 2018.
Average total pay for employees in Great Britain, including bonuses, was £517 a week in nominal terms before tax and other deductions in May 2018. This compares to £505 a week in May 2017. Average regular pay, excluding bonuses, was £486 a week for British employees in May 2018, before tax and other deductions from pay. This compares to £474 a week in May 2017.
In real terms, average total pay for employees in Great Britain was £489 a week in May 2018, before tax and other deductions from pay. Average regular pay in real terms, excluding bonus payments, was £460 a week in May 2018, before tax and other deductions from pay.
Average total pay for employees in Great Britain, in nominal terms, increased by 37.4% between January 2005 and May 2018, rising from £376 a week to £517 a week. Over the same time period, the Consumer Prices Index, including owner occupiers’ housing costs (CPIH), increased by 35.2%.
Ian Brinkley, acting chief economist at the Chartered Institute for Personnel and Development (CIPD), said: “Wage growth, comparing regular pay over the last three months with the same three months of last year, has started to slacken. Real wages continue to rise, but this owes more to the continued fall in inflation rather than any improvement in wages.
“It looks as if employers have been coping with recent weak growth by offering more jobs with fewer hours. If and when GDP growth revives later this year, we might expect more full-time employment. However, as things stand there appears to be little immediate upward pressure on wages despite growing labour and skill shortages.
“Employers should nonetheless not be misled by these short-term signals. It is still highly likely that labour will become more constrained over the coming years, partly as a result of Brexit, so now is the time to start making long-term plans on workforce development and enhanced investment in skills.”
Tom Milson, executive director at GWM Investment Management, added: “Although [this] report showed wage growth had slipped slightly, employment has risen over the past three months and economic activity seems to show that labour demand should remain high over the coming months. This would therefore suggest that wage growth should show some acceleration in the coming months and provide the Bank of England with support for a rate hike in the near term. However, a greater than expected rise in the pay number may give grounds for a stronger response from the Bank of England.”