Earnings Rise by 2% in Past Year

Wages in the UK rose by nearly 2% in the last year, representing the largest margin of increase that has been seen since the economic crisis.

The fall in wages that many workers across the country have been experiencing has come to end. The average annual earnings across the UK rose by 1.8% in the year up until April. The Office for National Statistics released its Ashe (Annual survey of hours and earnings), revealing that there has been a real terms increase of 1.9% after inflation is taken into account.

The increase means that the average gross annual income for people who work full-time jobs has gone up to £27,600. This represents a 1.6% increase on the average seen in 2014.

This information will be seen as good news by ministers; the average inflation-adjusted wage had dropped every year since 2008.

However, many market experts have stated that this is well below the amount that the Bank of England had been aiming for. The Bank had been hoping to see levels of increase of around 3.5-4% before they initiated a rise in interest rates.

It is also thought that the vast majority of these pay rises were being seen in areas within London and the south-east of England. Areas such as the north, west and north-east were not seeing the same level of increase.

A spokesman for the recruitment firm Adzuna, Doug Munro, said:

“The north-east is particularly bearing the brunt of lower wages. Without investment and infrastructure, the area continues to be haunted by low salaries. Areas such as Sunderland still have strong competition for jobs, which is pushing many jobseekers into lower-paid positions.”

North-east Derbyshire currently has the lowest average weekly wage of £389, in contrast the City of London has the highest at £921. The only area to see earnings drop was Wales, with a decrease of 0.1% on last year.

The director of the Jobs Economist consultancy, John Philpott, stated that these figures showed a “relatively modest nominal increase in median earnings outstripping zero CPI inflation”.

He also said that these figures indicated a lower level of growth than the weekly earnings figures reported by the ONS average weekly earnings report (AWE); their figures currently show an average pay increase of 2.7% each year.

Philpott said:

“While the Ashe and AWE figures are not directly comparable, the annual survey data therefore indicate that the underlying degree of wage pressure in the UK labour market may be less than previously thought, which may support a dovish view of the outlook for interest rates”.

Munro said that there was some feeling that the “national living wage” would help lower paid workers and women in part-time work:

“The hope is that come April, the national living wage will start to even out the imbalance in pay across gender, and support those in low-paid positions,”

“The hard work of the healthcare sector still lies largely unrewarded. As the care industry is put under increasing pressure, the sector still has the highest number of low-paid jobs. Education too contains a high proportion of workers paid below-average wages. But clearly, these sectors are vitally important to our society, and are clearly deserving of more support. Despite predictions that one in seven of new hires will be set to benefit in the wake of living wage measures, improving wages currently remain an illusion.”

The ONS said:

“This is the lowest since the survey began in 1997, although the gap has changed relatively little in recent years. A similar trend is seen when part-time employees are included, although the gap in 2015 is unchanged from 2014, at 19.2%”.

The thinktank’s chief economist, Matthew Whittaker, said:

“It is welcome that the recovery has been strongest among lower earners. In part, that is likely to be due to ambitious minimum wage increases ñ which will be reinforced next year by the new ënational living wage ‘.

“But the return of rising pay is just the first step on the long journey back to pre-crash wage levels. If last year ‘s pay recovery is sustained, it will take another six years to recover the ground lost since the crash. And it will take even longer for workers in their 20s and 30s.”

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