Official figures show that UK wages are rising in line with inflation. Photo: Peter Siborra/Reuters
Wages have risen at the fastest pace on record outside the pandemic but still lag behind inflation.
The Office for National Statistics (ONS) said average earnings excluding bonuses rose 7.2% over the 12 months – up from 6.7% recorded in March.
It is closer to catching up with inflation than in previous months, but still falls short of the pace of price growth. UK inflation was seen at 8.7% in April.
In real terms, growth in total and regular pay fell to 2.0% for total pay and 1.3% for regular pay in February to April 2023.
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Wages were boosted by a 9.7% increase in the minimum wage in April. Total pay, including bonuses, increased 6.5% year-on-year in the three months to April.
“In cash terms, basic pay is now rising at the fastest rate since the current record began, apart from the period when the figures were distorted by the pandemic. However, even then, wage growth continues to lag behind inflation,” said Darren Morgan, director of economic statistics at the ONS.
The average regular wage increase for the private sector was 7.6%, again the largest growth rate seen outside the pandemic period.
Public sector wage growth lagged behind, increasing by 5.6%, the fastest rate of growth since August to October 2003 (when it grew by 5.7%).
The finance and business services sector saw the largest regular growth rate of 9.2%, followed by the manufacturing sector at 7%.
Alice Heine, personal finance analyst at Bestinvest, said: “Despite interest rate hikes 12 times since December 2021, as the cost of living crisis continues to make a dent in disposable income, financial struggles still very real for those workers.” who are not only seeing higher cost of living, especially food bills rising, but now rapidly rising borrowing costs have eroded take home pay.”
It comes as the UK unemployment rate fell to 3.8% in the three months to April, from 3.9% in the previous three months.
The number of people missing work due to illness has reached another record high. About 2.6 million people are not working due to health problems for a long time.
The number of people in employment rose to a record high in the three months to April, with an increase in the number of both employees and self-employed workers.
According to the ONS, the UK employment rate was estimated at 76% from February to April, which was 0.2 percentage points higher than from November to January.
Read more: Interest rates: Bank of England policymaker hints at further hikes
Chancellor Jeremy Hunt acknowledged that inflation is outpacing earnings, saying: “The number of people in work has reached a record high, and the IMF and OECD have given credit to our major reforms in the recent budget Which will help even more at work while the economy is growing.
“But rising prices are eating into people’s pay checks – so we must stick to our plan to halve inflation this year to boost living standards.”
From March to May, the estimated number of vacancies fell by 79,000 in the quarter to 1,051,000. This is the 11th consecutive period when vacancies have decreased.
The Office for National Statistics said it “reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor holding back recruitment”.
Commenting on the global hiring platform Indeed, UK economist Jack Kennedy said: “Although labor shortages have eased, with vacancies falling for an eleventh consecutive month in May, they are likely to remain a long-term issue. Inactivity among working-age people is still higher than before, despite nearly 300,000 fewer than their peak last summer. -remains nearly 350,000 above pandemic levels. Inactivity due to long-term illness remains a major concern, reaching a new record high of more than 2.5 million in the latest period.”
The figures put pressure on the Bank of England to continue raising interest rates to avoid an inflationary spiral.
Yael Selfin, chief economist at KPMG UK, said the UK’s “continued strength in wage growth” would warrant higher interest rates.
She said: “The pickup in regular wage growth is the latest sign that inflation is driving up wage demands, which in turn are keeping inflation stable. With negative productivity growth, these figures are well above the levels consistent with the 2% target.
“If there was still any doubt about the direction of monetary policy, these data should reinforce another interest rate hike from the Bank of England next week, and perhaps more in the coming months.”
View: How does inflation affect interest rates?
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Source: www.bing.com
