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Fall in pay paints grim picture for UK living standards

Commenting on the latest ONS labour market statistics, Gerwyn Davies, Labour Market Adviser at the CIPD, the professional body for HR and people development, said:

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“The overall employment figures are strong, with employment up and unemployment down to the lowest rate since 1975. However, that positive news is overshadowed by confirmation that real regular pay is now falling, with a 0.2% drop in the last three months.

“The combination of rising inflation and poor productivity paints a grim picture for UK living standards. As well as hitting UK workers in their pockets, this fall in real regular pay also potentially puts at risk an economic recovery that has been reliant on strong consumer spending. The latest CIPD/The Adecco Group Labour Market Outlook suggests that the pay squeeze will continue for some time, with employers suggesting that their median pay increases will be just 1% for the next twelve months.

“The figures also expose a problem with unfilled vacancies, which now stand at 780,000. This reinforces the need to increase investment in the current workforce, as it is likely that future labour availability will be constrained by Brexit and tighter restrictions on inward migration. The high demand for labour may partly explain why the number of EU nationals in employment has grown sharply in the first quarter of 2017 compared with the second half of 2016.”