UK Wages rise above inflation for the first time in 6 years

UK Wages rise above inflation for the first time in 6 years

For the past few years we have seen a gradual rise in employment figures in the UK; however it seems that finally wages are on the rise too. Last month a published report showed the latest figures on UK employment, unveiling not only a five year high in employment figures but also an increase in average wages which have exceed inflation for the first time in six years.

Weekly wages, including bonuses, rose by 1.7% in the year to February, up from 1.4% in January, according to the Office for National Statistics (ONS). It is the first time that earnings have matched inflation since 2008 apart from two months in 2010, showing the strongest growt since before the financial crisis!

Hugh Pym, Chief economics correspondent for BBC News commented:
“Earnings move above cost-of-living increases. That headline will dominate much of the debate around these labour market figures (…)

The squeeze on workers’ living standards which has persisted more or less continuously since 2008 is technically over.”

However whilst the latest figures are a promising result for the UK workforce, there is still more progress needed to reach the levels of pay seen pre-recession. Unfortunately when bonus payments are excluded from the figures, wages rose by 1.4%, still below the rate of inflation.

The ONS’s report has also been scrutinised for not taking into account the estimated 4m workers – around 15% of the total- in the UK who are self-employed. According to the Resolution Foundation, such workers are more likely to be involved in “low paid odd-jobbing” rather than highly-paid entrepreneurial jobs.

Pym further commented:
“It is worth noting that of the 239,000 increase in those in work over the quarter, 146,000 was self-employment. The debate over how many of the self-employed are there only because they have lost jobs elsewhere will continue.”

More research is needed to be done by ONS to really understand how money earned from self employment will affect the average national wage, and whether it can still remain above inflation.

Despite this, the increase in wages above inflation coupled with the ever increasing rise in employment in the UK is a good sign on the UK’s long road to recovery. It is important that all companies and businesses regardless of size are aware of the changing economy and consider the cost of inflation on their workers when deciding salaries.

Are you like many other workers feeling the pinch of the rising cost of living? Perhaps its time to look for a better paid job? Check out KennedyPearce’s latest hot jobs in Finance and Executive Support.

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