Average advertised salaries rose to £34,463 in August, up 1.9% from £33,873 in August 2013, compared to a CPI inflation rate of 1.5% over the same period. In real terms, advertised salaries climbed £149 over the last twelve months – the first growth in real terms since the financial crisis.
At the same time, the UK’s job creation continued to soar, with advertised vacancies rising 30% year-on-year from 698,862 in August 2013 to 905,297 in August 2014. Based on current growth forecasts, there are now projected to be over 1 million vacancies available by the end of 2014, according to Adzuna data.
The ratio of jobseekers to vacancies declined from 1.99 in August 2013 to 1.06 in August 2014. On a monthly basis, the ratio fell 0.8 percentage points from 1.14. If this rate continues into September, next month may see more vacancies than jobseekers for the first since the recession.
Andrew Hunter, co-founder of Adzuna, explains:
“Exceptional growth in advertised vacancies again this month highlights extreme positivity in the jobs market, as employers turn away from the traditional August slowdown in favour of continued expansion. Looking at pay rates, it seems the cart has at last caught up with the horse as the UK experiences real wage growth for the first time since the financial crisis. Much of the UK’s economic good news has arrived on the back of high levels of job creation, but this has often been at the expense of low wages. However, as companies enjoy more profit, salary growth is finally starting to outpace inflation. A real wage rise marks a significant turning point in the road to economic recovery. This time next year, phrases like ‘the cost of living crisis’ may fade into a distant memory.
“News of real wage growth will further fuel interest rate speculation. With the Bank of England stressing it is waiting for a pick-up in wages, this significant news could push forward the notion of an interest rate rise before 2015. As real wages look set to continue growing over the coming months, expect the calls for an interest rate rise to get louder.”
For the first time since the recession, advertised salaries rose year-on-year in every region of the UK in August. This included London, which witnessed its first annual wage growth in a year, with advertised salaries rising 0.6% from £42,086 in August 2013 to £42,321 in August 2014.
While the capital has been slow to catch up, the salary gap between the highest and lowest paid regions has closed considerably over the past year. The gap between London, the highest paid region, and Northern Ireland, the lowest paid, has shrunk by £1,718 since August 2013. London’s sluggish wage growth has allowed other regions to close the UK pay divide.
On the news that now all UK regions are experiencing wage growth, Andrew Hunter comments:
“The rebounding UK economy is now providing a recovery felt by the many, not the few. As the pay gap between London and the other regions of the UK shrinks, employers in the capital are beginning to slide up salaries, to ensure continued access to the best staff. Historically, the bright lights of the city have attracted a host of hopeful job hunters to London. But as further opportunities for work open up elsewhere, and the cost of living stays stuck at an all-time high in the capital, employers have to raise the salary bar to stay attractive.
“The next milestone for the UK to cross will be when all regions begin to see a real wage rise. Workers in both London and Scotland are yet to experience an above inflation salary increase. Wages may be climbing year-on-year, but workers in these areas are yet to feel the weight of that extra cash in their pockets.”
