-Jon Cunliffe, BoE policy maker
UK wage growth remained tepid in the three months through May, and prospects of gains in the near term remained doubtful. According to a new report from XpertHR, the median pay award was unchanged at 2%, with low wage growth settling in for the long term, the view which contradicts comments by the Bank of England. Policy makers expect wages to pick up considerably in the coming months as the British labour market continues to tighten. Currently the average 2% wage growth offers Britons higher real income as consumer price inflation stood at 0.1% in May. Nevertheless, the official indicator measuring average weekly earnings was climbing between January 2003 and December 2008 at an average pace of 4.2%. The gauge, however, declined to an average rise of only 1.2% in the period of January 2009 and 2015. The BoE predicts wage growth to accelerate to 4% by the end f 2016, which should bring inflation to the target by the end of 2017.
According to the latest official data, UK average earnings, excluding bonuses, reached a six-year peak in April rising on average by 2.7%. The biggest gains in pay were recorded in the services and construction sectors, while manufacturing and public sectors pay continued to lag significantly behind. BoE policymaker Jon Cunliffe said the period of weak wages and extended spare capacity in the British labour market is ending slowly as pay and productivity growth are seen to continue rising.
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