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Bloomberg
UK labour costs are rising at their fastest pace in more than two years, latest figures showed.
The cost of employing someone for an hour of work rose 3.7 percent in the fourth quarter compared with a year earlier, up from 3.1 percent in the previous three months and the most since the July-September period in 2015, the Office for National Statistics said.
From the previous quarter, labour costs were up 1 percent. The figures suggest pressure is building on firms to protect margins by raising prices unless there is a corresponding pickup in productivity.
The government’s fiscal watchdog remained downbeat about productivity in it latest forecasts published recently, predicting output per hour would grow less than 1 percent on average over the next three years.
The increase in labour costs over the past year was driven by non-wage expenses, which jumped by 6.5 percent. That includes national insurance and pension contributions as well as sickness and maternity pay.
Wage costs rose by 3.1 percent. Pressures were strongest in the private sector, where labor costs climbed by 4 percent.