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Rising inflation could lead to pay squeeze, says CIPD

  • 19 Oct 2016

Commenting on the latest labour market statistics from the ONS, CIPD Acting Chief Economist Ian Brinkley said: "Overall job growth has been strong, so in the short term the labour market remains resilient. There are some underlying weaknesses with most of the new jobs being part time and there has also been an increase in temporary work.

"The overall unemployment rate remains stable, but there has been a decrease in the number of people classified as economically inactive who say they want a job. More worrying is that youth unemployment has modestly increased, rising by 7,000 in the last quarter.

"However, it is still too early to read any Brexit impact into these figures, as they only cover the period to August. Any future impact is more likely to show up through a gradual slowdown, rather than a dramatic decline, as employers become more cautious about hiring.

"Regular pay has remained stable, with average weekly earnings increasing by 2.3 percent comparing the last three months with the same three months a year ago. However, as inflation is widely expected to exceed two percent next year as the impact of the pound's devaluation feeds through into prices, we could be heading for another period of very low or negative real wage increases for many workers."

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