Wage growth has slowed down while unemployment has fallen to 5.1%, the lowest on record.
According to the Office for National Statistics, the number of people out of work fell by 99,000 to 1.68 million from September to November 2015.
Average weekly earnings, including bonuses were up 2%, the slowest increase since February 2015.
Excluding bonuses, average weekly earnings growth slowed to 1.9% in the three months.
Bank of England governor Mark Carney used a speech on the 19 January to highlight that despite falling unemployment, there is still a complex range of factors affecting wages. Carney noted the importance of “pay relative to productivity” and said that growth in output per worker had been “around 1%” and is “likely to have fallen further towards the end of 2015.”
Mark Beatson, chief economist at CIPD, commented:
“This is not surprising because the fundamental conditions required for a step change in pay growth are simply not there.
“Most employers still believe there are enough competent applicants out there to fill their vacancies, and, furthermore, productivity growth remains relatively weak. Conditions remain good for firms to invest in training and development and upgrading the skill content of jobs.”
Helah Miah, investment research analyst at The Share Centre, said:
“However, the rate of wage growth still seems to be slowing down falling to 2% from the previous month’s 2.4%. This along with an increasing number of people in self-employment, potentially forced to taking this option would suggest that there still remains some slack within the employment market.”
Laura Gardiner, senior policy analyst at the Resolution Foundation, added:
“But while recent employment trends are very positive, the UK’s pay recovery risks running out of steam. Real earnings growth has fallen back below its pre-crisis trend, even while inflation remains close to zero.”