Wage growth has accelerated and decelerated at the same time due to inflation
26th October 2022 11:03
by Myron Jobson from interactive investor
Myron Jobson, senior personal finance analyst, comments on ONS employee earnings in the UK 2022.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “It may seem strange, but wage growth has accelerated and decelerated at the same time because rampant inflation has completely nullified uplifts in pay packets – and then some, on average.
“The average annual pay for full-time employees rose to £33,000 by the end of the 2021-22 tax year, with average weekly earnings among full-time employees increasing by 5% in April 2022 compared with April 2021. This growth is the highest since comparable records began in 1997, but is partially affected by employees on furlough in April 2021.
“While the year-on-year data on wages is skewed by the furlough scheme, looking at long-term trends, it is clear that rampant inflation has eroded pay packets, with wages for both full-time and part-time employees among the largest falls seen since comparable records began.
“Data on wage inflation often doesn’t reflect reality for workers. Monthly updates on employee earnings do not reflect the fact that many workers are likely to receive pay rises on an annual basis – if at all. But we are seeing the impact of rampant inflation more frequently, from the amount we spend to put food on our tables, to the cost of gas and electricity.
“Looking ahead, if red-hot inflation comes off the boil as hoped, pay rises could finally catch up to price rises. This would help improve workers’ living standards. But reining in inflation remains a tall order for policymakers.”
Key points:
- Median weekly pay for full-time employees was £640 in April 2022, which is a 5.0% increase over the £610 in 2021.
- In real terms (that is, adjusted for inflation) in April 2022, median weekly pay for full-time employees fell by 2.6% on the year.
- Mean paid hours worked for all workers stayed the same between 2021 and 2022, after increasing 1.5% between 2020 and 2021; as with last year, those aged 60 years and over saw an increase in mean paid hours and those aged 18 to 21 years continued to decrease.
- Furlough scheme skews year-on-year data.
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