UK labour market data, June 2017 - PwC comments

Jun 14, 2017

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In response to today’s UK labour market figures, John Hawksworth, chief economist at PwC, commented:

"Today's labour market data confirmed recent strong jobs growth, but the most striking feature was the growing squeeze on real pay levels, particularly in the public sector.

“More than 100,000 jobs were added in the three months to April compared to the previous three months, and it seems that the pace of jobs growth has picked up again recently after slowing in late 2016. This has kept employment rates at record highs and the unemployment rate at the lowest levels since 1975.

“But despite this strong labour demand, regular pay growth has slowed markedly to just 1.7%, though this was bumped up to 2.1% if you include bonuses. With inflation likely to be heading above 3% later this year, the squeeze on real pay growth is now getting serious and is likely to dampen real consumer spending growth for some time to come. The cost of Brexit to people's living standards due to the fall in the pound is becoming ever more apparent.

“The squeeze is even more severe in the public sector, where pay is only rising at around 1%. The sustainability of this pay policy for nurses, doctors, teachers and other key public service workers will come increasingly into doubt as inflation rises to 3% and above later this year."


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