Wages in the UK in the three months to August increased at their fastest rate since 2009, according to official figures from the Office for National Statistics (ONS).Regular pay was up 3.1 per cent on the year, outstripping inflation at a time when the unemployment rate has dropped to four per cent, the lowest in more than 40 years.Data from the ONS on Tuesday also showed that the number of people in work - 32.39 million - remained at a near-record high and was 289,000 higher than a year earlier, despite a marginal fall of 5,000 in the employment total for the quarter.

UK government must work with business on a post-Brexit immigration system

But with the number of recorded vacancies close to an all-time high, the British Chambers of Commerce (BCC) issued a call to the government to work with business to ensure the introduction of a post-Brexit immigration system that would enable businesses to hire the foreign skills they needed.Commenting on the latest data, David Freeman, the head of labour market statistics at the ONS, said: "People's regular monthly wage packets grew at their strongest rate in almost a decade but, allowing for inflation, the growth was much more subdued."The number of people in work remained at a near-record high, while the unemployment rate was at its lowest since the mid-1970s."

UK Minister of State for Employment encouraged by the latest wage and employment figures

Alok Sharma, Minister of State for Employment, welcomed the latest figures. “I am particularly encouraged that wages continue to be on the up, outpacing inflation for the seventh month in a row and regular pay is up 3.1 per cent on the year.“And with unemployment at its lowest since the 1970s, since 2010 there are more people with the security of a job, more people with a regular salary, and more people able to support their families - and that is thanks to action this government has taken to build an economy that works for everyone.”

Despite the positive picture, current squeeze on spending power is unlikely to ease

Suren Thiru, head of economics at the BCC, said the latest figures painted a positive picture of the UK jobs market.But he added: “While wage growth increased again, the pace at which pay growth is exceeding price growth remains well below the historic average, meaning the current squeeze on spending power is unlikely to ease."Achieving a meaningful improvement in wage growth will be an uphill struggle unless the underlying issues that continue to limit pay settlements are tackled - notably sluggish productivity, considerable underemployment and high upfront costs for businesses. 

Worrying skills shortages plague UK businesses

“The number of job vacancies is close to an all-time high, providing further evidence of the worrying skills shortages plaguing UK businesses. Firms are reporting that recruitment difficulties have reached critical levels, which coupled with Brexit uncertainty is increasingly putting employers off trying to hire, and if sustained could increasingly weigh on jobs growth.“Against this backdrop, the upcoming budget must be used to halt the alarmingly decline in apprenticeships, including scrapping the 10 per cent co-investment apprenticeship contribution rule for small businesses, a key barrier to SMEs recruiting and training young apprentices."We also urge ministers to work closely with business to deliver a future migration system that enables access to the skills needed at all levels to help grow our economy.”

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Find out how companies are preparing for Brexit in the autumn issue of Relocate magazine

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After analysing the data, Geraint Johnes, professor of economics at Lancaster University Management School, said the figures not only showed an increase in real pay but also that more people were getting full-time jobs. "Large falls in employment are recorded amongst part-time employees (55,000) and full-time self-employed workers (35,000). At the same time, the number of full-time employees rose by some 87,000," he said."Taken together, these statistics reflect the continuing restoration of normality to the labour market, with more workers now employed in secure full-time jobs, and fewer in less secure part-time jobs and self-employment.“Regular pay (on the preferred three-month measure) rose by 3.1 per cent, the first increase of more than three per cent in this indicator in ten years. With CPI inflation (including housing costs) at 2.4 per cent in August, these data indicate some long overdue growth in real pay.”

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