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Boost for workers as wage growth climbs to 10-year high

Paloma Kubiak
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Paloma Kubiak

Latest estimates suggest average pay continues to increase, with wage growth rates at their strongest in 10 years.

In the three months to September 2018, average weekly earnings increased by 3.2% excluding bonuses, and by 3% including bonuses.

In real terms (adjusted for inflation), wages increased by 0.9% excluding bonuses and by 0.8% including bonuses, compared to a year earlier.

The figures from the Office for National Statistics (ONS) show average pay stood at £524 per week, up from £510 per week a year earlier. Taking into consideration inflation, the figures stood at £493 and £490 respectively.

Ed Monk, associate director for personal investing at Fidelity International, said: “This is exactly the pre-Christmas boost the UK needed. It has long been suggested that wage growth has been the missing piece of the puzzle in Britain’s long, slow recovery from the financial crisis. It should be the key to unlocking a return to monetary normality.”

Laura Suter, personal finance analyst at investment platform AJ Bell, added: “Households are now seeing their wages rise by considerably more than inflation, which stands at 2.4%. When inflation is taken into account the increase in wages is the highest since the three months to December 2016.

“Retailers will be hoping this boost will mean people loosen the purse strings this Christmas. The reality for many is that any increase in take-home pay is likely to be funnelled into paying down the large sums of debt many households have taken on in the past few years, including the rising sums on credit cards.”

Turning to employment figures, there were 32.41 million people in work, which is 350,000 more than the previous year. But comparing July to September 2018 with the previous three months, the employment rate remained at 75.5%.

There were 1.38 million unemployed people which was 21,000 more than for the previous three months but 43,000 less than for a year earlier. The unemployment rate came in at 4.1%, slightly higher than the previous figures recorded.