Real pay dropping at fastest rate since records began

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T

he squeeze on people’s pay packets was revealed on Tuesday as official figures showed real wages are dropping faster than at any time since records began.

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Although regular pay excluding bonuses grew by 4.3 per cent between March and May 2022, that is less than half the rate of inflation in May of 9.1 per cent.

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With the Bank of England forecasting that inflation could rise to 11 per cent in the autumn, workers face the prospect of their salaries being further eroded by spiraling prices.

David Freeman, head of labor market and household statistics at the Office for National Statistics, said: “Following recent increases in inflation, pay is now clearly falling in real terms both including and excluding bonuses. Excluding bonuses, real pay is now dropping faster than at any time since records began in 2001.”

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The ONS said growth in average total pay including bonuses was 6.2 per cent but still some way short of the current rate of inflation.

Yael Selfin, Chief Economist at KPMG UK, said: “Robust growth in regular pay masks a weakening purchasing power of households as real earnings growth fell for the sixth consecutive month. With a more persistent inflationary outlook, consumers will likely remain under pressure for longer before they can afford a return to their previous spending patterns.”

Overall Mr Freeman said that the figures showed a mixed picture for the labor 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 labor clearly still very high, unemployment fell again, employment rose and there was another record low for redundancies.”

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Credit: www.standard.co.uk /

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