Pay growth remains healthy – but signs of cooling are evident as vacancies fall for the eighth month in a row 15 October 2019 Pay growth remains healthy – but signs of cooling are evident as vacancies fall for the eighth month in a row A tight jobs market is continuing to deliver pay growth for workers, but another fall in vacancies shows that pay pressure is cooling, the Resolution Foundation said today (Tuesday) in response to the latest labour market figures. Pay growth in the three months to August 2019 remained healthy at 3.8 per cent, driven by recent record levels of employment, and real pay growth was 2.0 per cent. With the employment rate at 75.9 per cent the labour market remains tight, but a fall of 0.2 percentage points over the quarter suggests that the market has stopped tightening. Cooling is also seen in the fact that vacancies fell for the eight month in row, and are 48,000 lower than they were at the beginning of the year. Productivity – the long-term driver of pay growth – remains persistently weak, falling by 0.5 per cent in the second quarter of 2019 compared to a year earlier. Combined with signs of loosening, the Foundation expects that pay growth will slow in the coming months. Average weekly earnings are still £2 a week below their April 2008 peak, highlighting the need for the recovery in workers’ pay packets to retain strength. Nye Cominetti, Economic Analyst at the Resolution Foundation, said: “Workers in Britain are continuing to feel the effects of a jobs-rich labour market, with real pay growth remaining close to two per cent. But pay pressure now appears to be easing, with falling productivity and fewer job opportunities suggesting that we are moving from a warm summer for workers’ pay packets to a cooler autumn. “In the midst of the worst decade for pay growth since the Napoleonic wars, workers badly need near-record levels of employment to sustain the pay recovery for as long as possible. Policy makers should be focused on avoiding unnecessary shocks to our economy in the immediate future, and getting productivity going in the longer term.”
