The news on employment was mixed yesterday, but look at wages and maybe we have reason to smile.
They have all been at it. The IFS warned of the worst pay squeeze since the 1910s, the Resolution Foundation the worst squeeze since the 1810s, and Bank of England governor, Mark Carney recently talked about the weakest period for real wages since the 1870s.
Real wages, as demonstrated by Mark Carney in his recent speech
What we can say is this: between early 2010 and the Autumn of 2014, inflation was higher than increases in wages. Or, to put it another way, growth in real pay was negative.
It was partly a function of the falls in sterling seen after 2008, pushing up on inflation.
It was partly because in the UK, unlike many euro countries such as France, unemployment fell rapidly, but the price we paid for this was weak growth in wages. In France, it was the opposite.
Many have feared that with the falls in the pound seen since the Brexit vote we may see a repeat of the 2010-2014 experience. Some expect inflation to rise to over three per cent, maybe a lot higher. Suggestions that that the oil price is set to rise add to this problem.
Maybe, this will happen.
But two things have happened recently that cast a more cheerful spell.
For one thing, the pound has been rising. Against the Euro, it is back in the region of 1.20 euros to the pound, not that much lower than the pre-Brexit level.
But according to the latest report on the UK labour market, from the ONS, wages with bonuses rose by 2.5 per cent in the three months to October, the fastest increase since May 2015.
Okay, employment shrunk a little during the period – down a modest 6,000. But UK unemployment remained at 4.8 per cent.
Paul Hollingsworth, UK Economist at Capital Economics said: "There were some tentative signs that productivity has picked up in the fourth quarter. Total hours worked fell by 0.1 per cent in the three months to October, while surveys such as the Markit/CIPS PMI, point to GDP growth of about 0.5 per cent in Q4. Stronger productivity growth should allow wages to strengthen without worrying the MPC that domestic cost pressures are building too. “
He added: " Looking ahead, we don’t think that any weakening in the labour market will be particularly severe. After all, survey measures of employment intentions continue to point to positive (albeit weak) growth in employment over the next few months and we remain more optimistic than most about the prospects for GDP growth over the next couple of years. As a result, we think that the unemployment rate will peak at about 5.5 per cent, which would still be low by past standards.”