Real pay growth in 2016 strongest in over five years – and set to be strongest for next five years too 26 October 2016 Low paid, part-time workers and women enjoy the biggest pay rises due to National Living Wage Real hourly pay grew at its fastest rate since 2009 off the back of historically low inflation – but the weak outlook for pay means this pace of growth may not be be repeated this parliament, the Resolution Foundation said today (Wednesday) in response to the ONS Annual Survey of Hours and Earnings. Resolution Foundation analysis of the latest figures show that real hourly pay (adjusted for RPIJ) grew by 2.6 per cent, the strongest growth since 2009 when inflation was negative. Adjusting for CPI inflation it grew by 2.9 per cent, the strongest growth since 2004. The Foundation notes that the National Living Wage has had a huge impact on the distribution of pay growth this year, with the low-paid, young people, women and part-time workers enjoying the strongest pay growth of all. However, the Foundation warns that while the year to April 2016 has been a good period for real pay growth, the outlook for over the coming years has weakened significantly since the EU referendum due to lower than expected nominal pay growth and higher inflation. It adds that typical earnings still remain 6.8 per cent below pre-crash levels (9 per cent for men and 4.4 per cent for women). Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said: “The introduction of the National Living Wage has well and truly made its mark on pay across Britain. The new wage floor has contributed to a significant closing of the gender pay gap and a welcome fall in pay inequality “But while 2016 has been the strongest year for pay in over five years, we may not see this level of growth again this parliament given the outlook for lower earnings growth and higher inflation in the wake of the Brexit vote “It’s encouraging to see pay finally recovering after a long and painful squeeze, but with the pace of recovery set to slow it could be another decade before we see a return to pre-crash pay levels”
