Labour costs per hour increased by 2.7% between January and March 2016, as compared with Q1 2015, according to the Office for National Statistics (ONS).

Labour costs per hour measures the hourly cost worked by an employee, primarily on wage earnings and non-wage costs.

Other costs measured include benefits in kind and employer contributions such as pensions and national insurance contributions (NICs).

The latest quarterly figures show:

• Wage costs per hour increased by 2.6%, while non-wage costs per hour increased by 4%.
• Costs per hour in the private sector also increased by 3.3%, while public sector labour costs per hour rose by 1.1%.
• Since 2000 both labour costs per hour have increased by 63.9% and wage costs per hour by 59.6%.

Michael Martins, economist at the Institute of Directors, said:

“Firms are increasing their number of full-time staff and raising pay. 1 particularly positive aspect of the figures is that short-term unemployment continues to decrease, while medium-term unemployment hasn’t grown.

“This means that those shifting from short-term employment are going into work and not dropping out of the labour force.”