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Skill shortages drive fastest wage growth for three years

Wages on the rise as employers are forced to up pay due to strong jobs market and growing skills shortages

The ONS has revealed a wage growth of 2.9pc in the 12 months to March, representing an acceleration from 2.8pc in February, and comes at a time of falling inflation. Price rises slowed to 2.5pc in March, so a 2.9pc increase in regular pay – which excludes bonuses – would mean the typical worker’s standard of living is on the up for a second consecutive month.

“We expect a further rise to 2.9pc,” said economist George Buckley at Nomura. “This improving real earnings picture should support the consumer – a key reason why we think the [economic] data will improve through the summer months.”

One of the factors contributing to wage growth is that more workers are changing roles by moving from one job to another, a statistic which the Bank of England monitors closely as an indicator of wage growth, as it is often traditionally a reliable way for people to gain a substantial pay rise.

In the final three months of 2018 – the latest data which is currently available – 2.6pc of people in employment moved to another job, the highest level since 2008.

“Unemployment has fallen back significantly and churn in the labour market has recovered, with the proportion of people moving from one job to another now around its pre-crisis rate,” said the Bank of England in its Inflation Report.

“That suggests some recovery in confidence among employees in their labour market prospects.

“As a result, businesses have needed to raise wages for new recruits in order to attract staff.”

The Bank’s economists expect pay growth to hover around 2.75pc for the rest of 2018. In 2019 this figure should rise to 3.25pc, then on to 3.5pc in 2020.

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7 comments

  1. Grant Morrison

    Supermarket job attracting over 10K applicants
    I’m a multi skilled manager and work on contracts because companies don’t want all my skills, preferring to use one of two at a time but increasingly I hear ‘you have to have worked in our industry to work in it’. There is an obvious problem here. I can explain what a job requires, how it is done, how it interacts with internal and external players but I am still considered to be wrongly qualified.
    Time for industry to stop complaining it can’t find staff and start asking the right questions or training staff so that jobs can be done.

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