Britain’s pay squeeze has finally ended – but public sector workers will have to wait

Britain’s 12-month pay squeeze has finally ended, though public sector workers will have to wait until new higher pay settlements are agreed to see real pay rises, the Resolution Foundation said today (Wednesday) following the latest labour market statistics.

Today’s figures show that real average weekly earnings fell by 0.2 per cent in the three months to January, fell by 0.6 per cent in the public sector, but were flat at 0 per cent in the private sector.

However, the Resolution Foundation pay projection shows that earnings growth is set to have returned to 0.1 per cent overall, and 0.2 per cent in the  private sector, in the three months to February.

This is set to be officially confirmed in next month’s official figures and will mark the end to the UK’s 12 month pay squeeze. Public sector pay is set to continue falling until new settlements are reached, with NHS workers set to be first in-line for an above-inflation pay rise later in 2018.

Despite this welcome news, average weekly earnings are still £15 a week lower than their pre-crisis peak in 2008.

The UK jobs market continues to plateau at record highs. Employment has been between 75 and 75.3 per cent for the last seven months, following 50 months of uninterrupted increases, while unemployment has hovered around 4.3 and 4.4 per cent, following 52 months of uninterrupted falls.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:

“Britain’s 12-month pay squeeze has finally ended, though public sector workers will have to wait until new pay settlements are agreed across the NHS, schools, the police and other parts of the public sector.

“While it’s a relief that pay packets are no longer shrinking, the outlook for anemic pay growth remains a huge living standards concern. Average pay is still lower than it was a decade ago, and an entire generation of young workers are still yet to experience the 3-4 per cent pay rises that were once the norm.”