Workers see wages lag behind inflation at 20-year low
UK workers saw their pay packets continue to lag heavily behind inflation despite a slight rise in earnings, according to The Office for National Statistics (ONS).
The ONS revealed that regular wages excluding bonuses plunged by 3.7% over the three months to May against the rate of consumer price index (CPI) inflation, representing the biggest slump in more than 20 years.
Regular pay, excluding bonuses, rose slightly to 4.3% for the period without taking inflation into account. It comes after CPI inflation hit a 40-year record of 9.1% in May and is expected to reach as high as 11% later this year.
The ONS added that total pay including bonuses lifted by 6.2% for the three-month period, as workers in the financial sector drove a rise in bonuses.
Pressure on wages came as official figures showed that the number of UK workers on payrolls rose by 31,000 between May and June to 29.6 million.
Meanwhile, the rate of unemployment decreased to 3.8% for the three-month period. Unemployment fell as job vacancies also continued to increase, with major staff shortages in industries such as hospitality and retail.
There were 1,294,000 job vacancies over the three months to June, representing a 6,900 rise on the previous quarter.
David Freeman, ONS Head of Labour Market and Household Statistics, said: “Today’s figures continue to suggest a mixed picture for the labour market. The number of people in employment remains below pre-pandemic levels and, while the number of people neither working nor looking for a job is now falling, it remains well up on where it was before COVID-19 struck.
“With demand for labour clearly still very high, unemployment fell again, employment rose and there was another record low for redundancies. Following recent increases in inflation, pay is now clearly falling in real terms, both including and excluding bonuses.”
Chancellor Nadhim Zahawi said: “I am acutely aware that rising prices are affecting how far people’s hard-earned income goes, so we are providing help for households through cash grants and tax cuts.
“We’re working alongside the Bank of England to bear down on inflation, providing support worth £37 billion this financial year for the cost of living, and investing in skills to help people get into work and progress.”