Wages have risen to above pre-financial crisis levels.

Wages have finally risen above the pre-economic crisis level for the first time.  This is good news, but it comes after a 12 year squeeze on living standards.

The Office for National Statistics said average weekly wages, excluding bonuses, have reached a fresh peak in real terms. This means pay packets adjusted for inflation are worth more than they were before the 2008 crash. Although only just.

The average wage excluding bonuses is now £511.61. In March 2008, the average wage would have bought you £510.96 (in 2019 prices). In other words, you are 65p better off than you were 12 years ago. A reminder that the past decade has been the worst for improvements in living standards in more than 200 years.

Wages rise seen as “significant moment after a lost decade for British workers”.

Although wage growth is now a little above 2008 levels, the annual rate of wages growth slowed in December and the average pay packets including bonuses are still 3.7% below the pre-financial crisis peak.  However, It is a significant moment after a lost decade for British workers.

Growth in average weekly wage packets, excluding bonuses, dropped to 3.2% in the three months to December, down from 3.4% in November. Growth in total wages, including one-off awards, fell to 2.9% from 3.2% a month earlier.

The director of the Jobs Economist consultancy, John Philpot, said:-

The return to peak wages had come as a result of weaker inflation rather than a boom in pay packets. 

“Employees can be said only to have limped back to their pre-crisis pay level.”

The Resolution Foundation thinktank said the return to record pay levels was welcome but that wages would have been about £141 per week higher if the pre-crisis trend for wage growth had continued.

Nye Cominetti, a senior economist at the foundation, said:

“The fact that is has taken 12 years to get to this point shows what a living standards disaster our pay packets have been.”

Suren Thiru, the head of economics at the British Chambers of Commerce, said the jobs market remained remarkably robust, given the underlying problems hindering the British economy.

“Lingering economic uncertainty can mean companies hire staff to fill orders rather than investing for the long term, weakening productivity. Slowing wage growth is a concern as it could trigger a broader slowdown in household spending, a major driver of UK economic growth.”

The number of people in work has also risen.

The number of people in work jumped in the final three months of the year with about 180,000 more people starting work.  The UK’s employment level now stands at 32.9 million.

The unemployment rate remained steady at 3.8%, the lowest level since the mid-1970s, as the number of people out of work fell by about 16,000 to just below 1.3 million.

However, a growing proportion of the workforce is on zero-hours contracts. This number reached a high of 974,000 last year. The government are being urged to look into how the uncertain nature of these contracts impacts people’s lives.

According to the ONS, Office of National Statistics:-

Employment rose by 180,000 to another record high of 32.93 million, while unemployment stayed at 1.29 million.

The figures from the ONS showed the number of women in employment increased again.  This time by 150,000 in the three months to December to a record high of 15.61 million.

Myrto Miltiadou, of the ONS, said:-

“In real terms, regular earnings have finally risen above the level seen in early 2008, but pay including bonuses is still below its pre-downturn peak.”

“Employment has continued its upward trend, with the rate nudging up to another record high. In particular, the number of women working full-time grew strongly over the past year.”

Employment Minister Mims Davies said: –

As we embark on a new chapter as an independent nation outside the EU, we do so with a record-breaking jobs market and business confidence on the rise.

“With wages still outpacing inflation, UK workers can expect their money to go further as we look ahead to a decade of renewal.”

However, the Institute of Directors warned:

“The UK jobs market ended last year in fine form, but 2020 may be more challenging for employers.”

“As more and more workers enter employment, it becomes harder for firms to recruit the employees they need, with a particular dearth in certain skill sets.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics. said:

The upside surprise to employment growth distracts from an otherwise slightly disappointing report.”

“Despite the recovery in business confidence since the general election, the single-month measure of job vacancies was 49,000, or 6%, lower in January than a year earlier, showing no improvement from its recent trend.”

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