Real wages in June 2023 were higher than a year ago for the first time in 18 months, ending a pay squeeze across Britain.
Wages grew by 7.8% in the three months to June, the fastest annual rate since records began in 2001, according to figures from the Office for National Statistics.
Darren Morgan, ONS director of economic statistics, said: “Coupled with lower inflation, this means the position on people’s real pay is recovering and now looks a bit better than a few months back.”
Prime Minister Rishi Sunak said there was “light at the end of the tunnel” for the millions struggling with the cost of living.
However, inflation remains relatively high at 7.9% in June and 6.8% in July, meaning real wages including bonuses rose by 0.5% in the year to June and wages excluding bonuses rose by 0.1%.
Moreover, while rising wages is a win for workers, not everyone is as optimistic.
Following the data, Sushil Wadhwani, a former member of the Bank’s rate-setting Monetary Policy Committee, said financial markets believe an interest rate rise at the next meeting in September is a “virtual certainty”.
Nye Cominetti, senior economist at the Resolution Foundation, said: “Pay growth accelerated in June to end Britain’s painful 18-month pay squeeze.
“This welcome news for workers won’t be shared by policy makers at the Bank of England though, as it will put further pressure on their efforts to curb inflation. They will hope that rising unemployment and falling vacancies will take the steam out of pay rises in the coming months.”
The wage growth figures also highlight the “unrelenting workforce pressures businesses are facing”, according to Jane Gratton, deputy director of the British Chambers of Commerce.
“In a tight labour market, employers are struggling to contain wage inflation as the expectations of their staff and job candidates continue to rise,” she continued.
Speak to us for advice on employing staff.