Employment reaches a new record high but real pay growth falls to lowest level in over two years 15 February 2017 Employment has inched up to a new record high but rising prices have reduced pay growth to its lowest level in almost two years, the Resolution Foundation said today in response to the latest ONS figures. Employment reached a new record high of 74.6 per cent and there was a welcome fall in working-age economic inactivity, which had been rising in recent months. The fall in EU-born workers in employment follows concerns from sectors reliant on migrant labour – such as farming and food manufacturing – about the availability of workers. However, pay growth is weakening off the back of rising prices. Real pay growth fell to 1.4 per cent in December, its lowest level since January 2015. Resolution’s latest pay projection following today’s figures, shows that with inflation rising sharply real pay growth is set to fall to around 1 per cent next month, less than half the pre-crisis average of 2.2 per cent. Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said: “Today’s figures show the jobs market remains robust, with employment reaching a new record high and inactivity starting to fall again. “However, the encouraging news on jobs isn’t feeding through into earnings, which have shown no sign of responding to fast-rising inflation. Unless this changes Britain is set for a fresh pay squeeze later this year. “The small fall EU-born workers in employment reminds us that the UK labour market outside of the EU will be very different to the one many employers have become accustomed to, and that now is the time to start preparing for that change.”
