Unemployment has fallen to its lowest level since 1974, standing at 3.6% in the three months to July.
The Office for National Statistics said the number of people in employment grew by just 40,000 in the May-July period, but this has not necessarily translated into higher wages.
Regular pay, excluding bonuses grew by 5.2% over the period, but when inflation is taken into account, real pay plummeted by 3.9% year-on-year.
Inflation is currently at a record high, having hit 10.1% in July, fuelled by energy and food costs.
The ONS said that total pay including bonuses lifted by 5.5% for the three-month period, falling by 3.6% with inflation taken into account.
Meanwhile, the economic inactivity rate – measuring the share of the population who are not in work and not looking for work – increased by 0.4 percentage points on the quarter to 21.7%, its highest since the three months to January 2017.
The ONS said the change was driven by an increase in people classified as long-term sick as well as students leaving the jobs market.