The latest Government statistics show that wages have grown by 2.8% compared to a year earlier.
Business groups have welcomed the news but they are also warning that small businesses in the UK need more support as employment costs rise.
Tej Parikh, senior economist at the Institute of Directors (IoD), said: "The labour market continues to be a bright spot for the UK economy. Businesses are creating new jobs, unemployment is at its lowest in 42 years, and workers will be reassured now that the worst of the squeeze on real pay packets appears to be behind us."
However, he added: "Many employers are already straining to fill vacancies due to chronic labour shortages … a further pick-up in salaries will also be restrained by the limited ability of SMEs - which employ 60% of the workforce - to compete for a shrinking pool of labour. As such, small business owners will need greater support in managing regulatory costs and raising their productivity if wage growth is to become a long-lasting facet of our economy."
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: "The end of a prolonged squeeze on real wage growth is an important moment, although maintaining positive real wage growth could prove challenging without sustained increases in productivity and relieving the high upfront costs which restrict pay increases … Against this backdrop, ministers must do more to support firms looking to recruit and grow their business, including easing upfront business costs and plugging the growing skills gaps."
Mike Cherry, national chairman at the Federation of Small Businesses (FSB), said: " Small firms have played a huge role in achieving the record-high employment rate we see today. With the national living wage and auto-enrolment contributions for employers rising this month, we need to see more support for small firms in managing the costs that come with making high employment a reality.
"Small businesses are preparing for a small Bank of England rate rise in the coming months. Any increase must be gentle enough for small firms to absorb, otherwise the BoE risks recent gains in economic confidence and investment."