UK wages pick up with fewer foreign nationals in the workforce

London - Pay for workers in Britain picked up in the fourth quarter and productivity gained as fewer non-nationals were in the workforce.

Average weekly earnings excluding bonuses rose 2.5% from a year earlier, the most since December 2016, the Office for National Statistics said on Wednesday. The overall employment rate rose to 75.2%, close to a record.

The figures may be welcomed by those supporting the UK leaving the European Union who had complained that open immigration undermined locals. They may also fuel speculation that the Bank of England could raise interest rates again as early as May after policy makers said the Brexit vote had lowered the pace the economy can grow without fanning inflation.

“Rising employment this past year was largely driven by UK nationals” as fewer eastern Europeans were working than a year earlier, ONS statistician Matt Hughes said. “These figures simply look at the number of people in work and aren’t a measure of migration.”

UK pay growth is still slower than inflation, which is running at 3%. The unemployment rate also rose to 4.4% as fewer workers were economically inactive. Private- sector pay gains accelerated to 2.6% from 2.5%.

BOE policy makers estimate there is little slack left in the economy, with surveys suggesting recruitment difficulties are forcing some firms to raise wages. Central-bank forecasts show unemployment averaging 4.2% in the coming quarters, below the 4.25% rate officials say the economy can sustain without generating inflationary pressure.

The outlook for rates depends on whether any pickup in wages is matched by productivity improvements, and there were some positive signs in the latest data.

Output per hour gained 0.8% in the fourth quarter following a 0.9% gain in the previous three months, which was the most in six years.

Figures on Thursday are expected to confirm that the economy grew 0.5% during the period.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
16.27
(-0.67)
ZAR/GBP
21.25
(-0.29)
ZAR/EUR
19.20
(-0.30)
ZAR/AUD
11.57
(-0.17)
ZAR/JPY
0.16
(-0.67)
Gold
1903.70
(-0.04)
Silver
24.51
(-0.66)
Platinum
884.00
(+0.40)
Brent Crude
42.50
(+1.69)
Palladium
2379.00
(+1.01)
All Share
54796.42
(-0.99)
Top 40
50276.84
(-1.23)
Financial 15
10376.28
(+2.34)
Industrial 25
74130.97
(-0.60)
Resource 10
52819.20
(-2.99)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
23% - 51 votes
No, I did not.
50% - 110 votes
My landlord refused
26% - 58 votes
Vote