Private sector wages 'rise 3.5%'

"Having been hit especially hard in the downturn, earnings in the private sector are now growing strongly"


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New figures will show that wages in private firms are increasing by up to 3.5%, it has been predicted.

The Resolution Foundation said if the figure is confirmed in official data on Wednesday, it would signal the fastest growth since 2012.

The think-tank said the statistics are likely to show weekly earnings growth excluding bonuses will be around 2.9% in the year to May, rising to 3.3% or 3.5% in the private sector.

Matthew Whittaker, chief economist at the Resolution Foundation, said: "The momentum gathering around Britain's pay recovery is set to continue to build this week, with real wages again growing above pre-crisis rates.

"Too much of that growth depends on ultra-low inflation that can't be sustained indefinitely, but after a six-year pay squeeze any period of catch-up is to be welcomed.

"Having been hit especially hard in the early part of the downturn, average earnings in the private sector are now growing particularly strongly.

"That's good news, but it offers a stark contrast to the public sector, where pay restraint is set to persist in the coming years. As the gap between pay growth in the two parts of the economy widens, so we might expect recruitment and retention problems to become more of an issue in the public sector.

"In this context, repeating the pace of public service cuts delivered in the last parliament over the coming years might therefore be expected to prove significantly more challenging than was the case in the last five years."

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