Real wages suffer worse plummet on record as cost of living crisis hammers UK

UK workers are suffering 'the worst pay squeeze in modern history' after regular wages plunged 2.8% compared to inflation - outstripping the last financial crash

Source > Mirror

By Dan Bloom Online Political Editor

19 Jul 2022, 08:29 BST

Brits’ real wages have plummeted by the worst rate on record as the cost-of-living crisis hammers the nation.

New figures today shows regular pay, without bonuses, grew 4.3% in the year to March-May 2022.

But once adjusted for soaring inflation, regular pay fell by 2.8% – the steepest drop since records began in 2000.

It inched past the previous record fall of 2.7% in September 2011 – and the worst is yet to come.

CPI inflation hit a 40-year record of 9.1% in May and is expected to reach as high as 11% later this year.

Below-inflation pay rises will be announced today for more than 2.2million public sector workers – including NHS staff, doctors and dentists, school teachers, police officers, prison officers and the Armed Forces.

Liz Truss, right, warned proper pay rises would lead to a “wage-price spiral” that made inflation worse
Liz Truss, right, warned proper pay rises would lead to a “wage-price spiral” that made inflation worse ( Image: PA)

And Tory leadership candidates have all rebuffed calls for higher pay rises, with Liz Truss warning they would lead to a “wage-price spiral” that made inflation worse.

Growth in pay including bonuses was better at 6.2%, meaning it only fell 0.9% in real terms on the year.

But the grim figures ramp up the risk of a summer of discontent with a string of industries threatening to strike.

Stephen Evans, Chief Executive of Learning and Work Institute, said: “The cost of living crisis is laid bare.”

He added: “With energy bills set to rocket further in the autumn, this must be top of the new Prime Minister’s in-tray.

“But the crisis is being felt unevenly with larger pay rises in sectors like finance, up 6.2%, while the public sector saw the lowest pay rises, at 1.9% – much lower than inflation.

“This highlights the need for action to tackle recruitment and retention challenges in our public services.”

TUC General Secretary Frances O’Grady said: “We can’t go on like this.

“UK workers are suffering the worst pay squeeze in modern history.

“The priority for the country must be to get wages rising across the economy – not tax cuts.

“That means decent pay rises for public servants, a higher minimum wage and stronger bargaining rights for working people and their unions.”

The TUC’s Frances O’Grady said: “UK workers are suffering the worst pay squeeze in modern history” ( Image: Paul David Drabble)

Shadow Chief Secretary to the Treasury Pat McFadden said: “Today’s record fall in real wages comes after a decade where wages have stagnated for workers across the economy.

“This is because the Conservatives have failed to grow the economy, which has left people more exposed to inflation and the cost of living crisis.”

Lib Dem Treasury Spokesperson Sarah Olney said: “People are seeing their paycheques eroded by soaring inflation month after month.

“Yet they’ve been left with a zombie Government that’s missing in action.

“Households need real help with their bills right now, not empty promises from would-be Conservative leaders and photo ops from an absentee Prime Minister.”

ONS head of labour market and household statistics David Freeman 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.”

DWP Minister Julie Marson chose to focus on other “fantastic news” in the figures, that show “we’ve got 2 million more women in work than in 2010.”

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