A low wage decade

10 April 2014 By Ian Campbell

Pay for British new hires is rising faster than inflation. That may sound like a harbinger of accelerating prices, but it is actually just a healthy catchup. Real earnings have fallen heavily in the crisis. On wages, the Bank of England has a few years of respite.

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Pay pressures hit their highest since mid-2007, according to a March recruitment industry survey conducted by Markit. The index measuring changes in pay awarded to people taking up permanent positions shows that salary pressures have risen over much of the past year, with especially strong rates of increase signalled since November.

According to the Office for National Statistics, total pay for employees in Great Britain was 1.4 percent higher in November 2013 to January 2014 than in the year-earlier period. The ONS said regular pay rose by 1.6 percent in the private sector and by 0.5 percent in the public sector.

A fall in petrol prices pushed the UK inflation rate to a new four-year low of 1.7 percent in February. It was the second consecutive month that the Consumer Prices Index had been below the Bank of England’s 2 percent target.

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