Fall in real wage growth highlights cracks in buoyant labour market
Commenting on the ONS Labour Market Statistics, Gerwyn Davies, labour market adviser at the CIPD, the professional body for HR and people development, said:
“The record number of people in employment is, of course, good news. However, there are a number of underlying factors that remain problematic, for example the fall in real wage growth from 1.7% to 1.4% over the last three months. This is especially concerning given the prospect of rising inflation in 2017.
“While there is an annual increase of 2.6% in average weekly earnings of employees, both including and excluding bonuses, data from this week’s CIPD Labour Market Outlook shows that the ability of employers to increase pay in the year ahead is likely to be constrained.
“The figures also offer further evidence that Brexit has had a discernible impact on the allure of the UK as a place to live and work. The sharp growth in the number of non-UK nationals from the EU in work in the UK ground to a sudden halt in the second half of the year and has actually fallen in the last quarter.
“As a result, employers in sectors that employ relatively large numbers of EU nationals, which also account for a sizable proportion of vacancies, are likely to come under further recruitment pressures if, as we expect, this trend continues. As our Labour Market Outlook showed, the demand for labour is likely to remain strong in the near-term, which is reflected by the high number of vacancies reported in this month’s figures.“