Wage growth hits 10-year high as 132,000 EU workers quit the UK
Wages grew at their fastest rate in a decade in the latest quarter as the employment rate also rose higher, according to data from the Office for National Statistics (ONS) released today.
People’s salaries grew by 3.2 per cent excluding bonuses in the three months to the end of September compared to last year, marking the highest growth rate since a 3.3 per cent rate recorded in December 2008, as real earnings continued to grow.
Adjusted for price inflation, average weekly earnings grew by 0.9 per cent excluding bonuses to £493, up from £478 this time last year.
But adjusted for price inflation to 2015 currency levels, wages were still £10 per week below the pre-financial crisis peak of £473 per week recorded in March 2008.
The numbers of people in employment and unemployment rose by 23,000 and 21,000 respectively on the previous quarter, but the labour market gained strength compared to the same period last year.
The unemployment rate fell year-on-year from 4.3 per cent to 4.1 per cent, or 1.38m people, while the employment rate grew by half a per cent to 75.5 per cent.
Meanwhile, the number of EU nationals working in the UK fell by 132,000 to 2.25m compared to 2017 figures, the largest annual fall since records began in 1997.
“With faster wage growth and more subdued inflation, real earnings have picked up noticeably in the last few months,” said ONS senior statistician Matt Hughes.
“However, real wage growth is below the level seen in 2015, and real wages have not yet returned to their 2008 levels.
“The recent uptick in British nationals in work and the decline in workers from the so-called A8 eastern European countries both seem to be accelerating.”
Laura Suter, personal finance analyst at investment platform AJ Bell, said: "This is a reason for celebration for UK workers, marking the highest wage growth since the three months to December 2008.
“This means households are now seeing their wages rise by considerably more than inflation, which stands at 2.4 per cent. When inflation is taken into account the increase in wages is the highest since the three months to December 2016.
“The past few years have seen British workers pummelled by a combination of higher inflation and very sluggish wage growth, meaning they have often faced a real terms wage cut. However, the current low unemployment appears to have shifted the odds back into workers’ favour, and we’re starting to see wages rise more meaningfully.
“Retailers on the high street will be hoping this boost to households will mean people loosen the purse strings this Christmas. While we might see some spending, it’s unlikely that we’re going to see a rush to splurge this spare cash.
“The reality for many is that any increase in take-home pay is likely to be funnelled into paying down the large sums of debt many households have taken on in the past few years, including the rising sums on credit cards.”