A survey carried out by the Bank of England (BoE) has indicated that wage growth is set to accelerate in 2018 as businesses begin to increase wages amid recruitment difficulties.
The survey, which polled 700 UK firms, found that many are finding it ‘increasingly difficult’ to recruit new staff members.
As a result, pay settlements are likely to increase both this year and next: pay growth could rise by 2% to 3% this year, with increases in 2018 of between 2.5% and 3.5%.
The news will undoubtedly come as a welcome relief to many households currently in financial difficulty.
Commenting on the news, Matthew Whittaker, Chief Economist at the Resolution Foundation, said: ‘It’s been clear for a while that the labour market has been getting pretty tight, but we haven’t seen much feed-through to pay.
‘One possibility is that the first thing to shift has been job quality, with zero-hours contracts, temporary working and other forms of atypical employment plateauing or falling in recent months.
‘If the tightness is feeding through to wages now, then that’s obviously good news for workers, who’ve been facing a return of the pay squeeze in 2017.’