Starting salaries in the United Kingdom have climbed to the highest level since before the Brexit vote—a further indication that the tightness in the labor market is starting to lift pay growth.
Advertised salaries climbed 1.9 percent in the year to December and are starting to “show signs of sustained growth,” employment search company Adzuna said in a report last Friday. The increase takes the average advertised wage to £32,940 pounds ($47,000), the highest level since May 2016.
Adzuna said the improvement may prompt workers to seek more attractive packages by looking for new jobs. Bank of England (BOE) Governor Mark Carney made a related point this week, telling a Parliament committee there’s been a definite improvement in pay for people changing employment.
“The labor market has continued to tighten,” Carney said. “We see it in a gradual firming of wages, particularly private-sector wages. And particularly a firming of wages for people who are shifting work.”
While inflation, currently running about 3 percent, continues to outstrip pay gains, the decline in real income may soon come to an end. Carney sees it happening later this year, as price growth cools and wage growth slowly improved.
“We’ve witnessed a few false starts with salary improvements, but they are finally showing a solid growth trajectory that is worth paying attention to,” said Doug Monro, cofounder of Adzuna.
Official data show that annual earnings growth has quickened to 2.4 percent, the fastest in almost a year, and BOE policy-maker Michael Saunders said last month it could accelerate to 3 percent or above in 2018. That means stronger domestic inflation, increasing the chance of interest-rate hikes. BOE officials will announce their next policy decision on February 8.