After years of pay rises below the rate of inflation, wages are finally catching up as average earnings increased by 1.7% in the year to February, above the CPI inflation rate of 1.6%, according to figures from the Office for National Statistics.
The announcement was followed by ONS figures that showed unemployment had fallen by 77,000 between December and February to 2.24 million
The coalition said the figures showed that "Britain was working again."
Esther McVey, the minister for employment, said: "More young people are in work, more women are in work, wages are going up, and more and more businesses are hiring - and it's a credit to them that Britain is working again."
However, Frances O’Grady, general secretary of the Trades Union Congress, said: “This is not worth even half a cheer."
Unions said that workers were still facing a squeeze in living standards, and said that when bonuses were excluded, average earnings rose by only 1.4%, still below inflation.
Labour's shadow work and pensions secretary Rachel Reeves said: “At long last earnings are finally rising faster than CPI inflation when bonuses are included, but after four years when prices have risen faster than wages there is a huge amount of lost ground to catch up."
Danny Alexander, Chief Secretary to the Treasury, told ITV News: "There's a lot more to do to ensure living standards rise in a sustainable way, that we support businesses to create more jobs, but I think this evidence shows that our economic plan is working and the UK economy is back on the right track."
Workers in Hull react to today's announcement - ITV News Economics editor Richard Edgar **reports: