UK wages fall at fastest pace in 20 years in June |  Inflation

UK wages fall at fastest pace in 20 years in June | Inflation

UK wages fall at fastest pace in 20 years in June |  Inflation

The real value of UK workers’ wages continued to decline at the fastest pace in 20 years in June as wage increases were outpaced by rising inflation amid the cost of living crisis.

The Office for National Statistics said the annual growth in average wages, excluding bonuses, increased to 4.7% in the three months to June against a background of low unemployment and many job openings.

However, the real value of workers’ wage packages fell 3% – the fastest decline since comparable records began in 2001 – after taking into account the preferred measure of inflation.

Average income growth, including bonuses, was 5.1% but also failed to keep pace with the rising cost of living.

The latest snapshot showed early signs of a slowdown in labor demand from employers, despite job openings remaining close to record highs. The ONS said the unemployment rate rose slightly to 3.8% in the three months to June, while the number of new job openings fell for the first time since the summer of 2020.

Job growth slowed to 160,000 in the three months to June, well below analysts’ forecasts, suggesting that the job market is beginning to cool as Britain’s economic performance falters.

Ruth Gregory, a senior UK economist at the consultancy Capital Economics, said: “June’s labor market data revealed further evidence that the weaker economy is leading to a slightly less tight labor market.”

The Chancellor, Nadhim Zahawi, said the latest figures show the UK job market is in a strong position, with unemployment falling below almost any point in the past 40 years. “[That is] good news in what I know are tough times for people,” he said.

“While there are no easy solutions to the cost of living that people face, we provide assistance where we can. We are delivering a £37bn aid package to households through cash grants and tax cuts so people can keep more of what they earn.”

However, the numbers highlighting the unprecedented blow to workers’ wages are likely to add to pressure on the government and conservative leadership candidates amid the cost of living crisis.

Labor said the numbers showed the Tories had lost control of the economy. Jonathan Ashworth, the secretary of shadow work and pensions, said: “This zombie government offers no solutions to the cost of living crisis.”

Inflation, measured by the consumer price index, reached 9.4% in July, the highest rate in 40 years. With another surge in energy bills expected this autumn, the Bank of England predicts inflation will peak above 13%, alongside a prolonged recession in which households are reining in spending.

Frances O’Grady, the general secretary of the trade union congress, said the figures show urgent action is needed by the government to support households in the run-up to a difficult winter. “They should cancel the increase in the energy price ceiling. And they need to do a lot more to keep wages rising — starting with raising the minimum wage this fall and giving decent pay raises to public sector workers.”

Wage data showed that the gap between public and private sector workers was widening, with private sector wages increasing 5.9% over the past year, more than three times the growth rate of 1.8% in the US. public sector.

According to an analysis by the accounting firm PricewaterhouseCoopers, the wages of the richest 1% of workers increased by nearly four times the percentage of the poorest 10th, highlighting how some households are more isolated from the cost of living than others.

The Resolution Foundation said the size of the wage squeeze was deeper than official figures suggest, with the real value of average weekly wages falling the most since the Queen’s Silver Jubilee in 1977.

Nye Cominetti, senior economist at the think tank, said: “This tightness has emerged despite robust wage growth and a vibrant job market, with wage arrangements improving slightly and nearly a million people changing jobs in the past three months.”

Leave a Reply

Your email address will not be published.