While employment has held up surprisingly well since the onset of the financial crisis in 2008 – and has rebounded much more rapidly than most expected in the last 12 months – pay growth has continued to disappoint. Annual increases in the regular pay measure captured in the ONS’ average weekly earnings (AWE) have consistently fallen below inflation, resulting in a six-year pay squeeze.

Many economists believed that pay would turn the corner in 2014, starting the long road back to recovery. Instead, nominal pay growth has fallen to a new low of below 1 per cent. Although inflation has also fallen, the pay squeeze continues. We may yet achieve positive wage growth before the end of the year, but it appears very unlikely that 2014 as a whole will be considered to be a year of rising pay.

Yet pay settlement data and some business surveys suggest that pay is increasing for some employees. The divergence between such measures and the official AWE data in part reflects the partial coverage of business surveys and the fact that they ask different questions. For example, survey data captures the balance of respondents who say they have increased pay, but not the magnitude of such increases. A given balance may therefore be associated with lower average pay growth than was the case before the crisis.

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