A report by the Office for National Statistics has found that average earnings are now rising at their fastest rate for over 2 years. With inflation also falling, this means that the squeeze on living standards is starting to slacken.
Average Earnings On The Rise
In its report, the Office for National Statistics stated that for the period November 2017 – January 2018, average earnings increased by 2.6%. Once bonuses are also factored in, the rise in average earnings was 2.8%. This is the fastest rise since September 2015, and with inflation falling to 2.5%, this means that living standards are now increasing on average in real terms.
Nevertheless, despite the rise in average earnings, the Bank of England have decided to keep interest rates at 0.5%, as the economy remains fragile. Moreover, with oil prices rising to a 3 year high, inflation is likely to be on the rise again. Furthermore, until the Brexit negotiations have concluded and this country finally leaves the EU, the uncertainties that remain in the UK economy overall are likely to persist, which will place a continued dampener on growth.
Stephen Clarke from the Resolution Foundation stated that : “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 anaemic 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% pay rises that were once the norm.“
Meanwhile, the general secretary of the TUC, Frances O’Grady, stated: “It’s nine years since the recession ended, but wages are still falling and workers’ living standards are worse than a decade ago. The great pay squeeze is a long-term crisis. We need major changes to get the economy working again for working people.”