This is according to the Resolution Foundation’s quarterly briefing.
Laura Gardiner, senior policy analyst for the Resolution Foundation, said the picture is “encouraging, with faster wage growth for lower earners contributing to falling earnings inequality". However, she added that the fact the self-employed aren't included in the analysis may distort the picture.
“A tightening labour market and ultra-low inflation were big drivers of pay recovery, but the expectation remains that inflation will soon start rising,” Gardiner said. “Productivity will have to do far more of the legwork in 2016 and beyond if the pay rebound is to be maintained.”
The report also found that productivity has shown a gentle rise of 1.3% year-on-year, but training has fallen by 5% annually. The number of graduates taking on non-graduate roles, which reflects a mismatch between qualifications and jobs and may constrain productivity, continued to rise at a rate of 2% year-on-year.
The briefing coincides with research from Group Risk Development (GRiD), which found that a quarter of employers (23%) believe productivity is an issue for their business and are trying to identify and tackle the factors constricting growth.
The researchers discovered that working from home and offering employees compressed hours ranked highest as measures to combat lost productivity, with nearly a third (29%) of employers saying they promote this. A quarter (24%) of organisations have invested in new equipment to boost productivity.
Katharine Moxham, a spokesperson for GRiD, said that the results show smaller businesses are also feeling the effects of the productivity puzzle. “It’s clear from these results that employers are starting to recognise the importance of acting to combat losses and are implementing a range of measures, which in itself is encouraging, but central to improvement is staff wellbeing,” she said.
“Ill health, stress and, therefore, absence can still strike. When they do they have a significant impact over the long term, so there is clearly more to be done to prevent this from becoming a continuous drain on the business,” she added.