Pay fails to keep up with rising prices
15th March 2022 10:08
by Myron Jobson from interactive investor
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Wages are fighting a losing battle against ballooning inflation.
- The Office for National Statistics has today revealed its latest labour market figures.
- The UK employment rate increased by 0.1 percentage point on the quarter to 75.6%.
- Growth in average total pay (including bonuses) was 4.8% and growth in regular pay (excluding bonuses) was 3.8% among employees in November 2021 to January 2022.
- In real terms (adjusted for inflation), growth in total pay was 0.1% and regular pay fell on the year at negative 1.0%; strong bonus payments over the past 6 months have kept recent real total pay growth positive.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Wages are fighting a losing battle against inflation, which has ballooned to its highest level in three decades. Put simply, the rising cost of living has nullified any growth in salaries - and then some. However, those fortunate to have received a bonus may now have just enough to fortify their finances against the inflationary storm.
“The squeeze on budgets is set to get worse, and those on the lowest incomes will be disproportionately hit by higher taxes, the surging cost of energy, food and fuel. And the fallout of the Russia-Ukraine is applying increasing pressure on household budgets.
“The record number of job vacancies juxtaposes the rise in the number of people out of work and not looking for a job. This has contributed to total employment remaining well below its pre-pandemic level. It is a worrying reality which raises important questions about motivation to work and what can be done to address this.”
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