Stress Mounts For UK Workers As Wage Growth Lags Behind Inflation
Incomes for UK employees saw their tightest squeeze since 2014 in the three months to December as wage growth in the nation slowed.
According to the most recent data from the Office for National Statistics (ONS), wage growth came in at 3.6%, down from a previous 3.8%, ramping up pressure on incomes amid the cost of living crisis.
Wage growth lagged behind inflation, which reached 5.4% in the 12 months to December. By April, this figure is expected to hit 7% amid the lifting of the energy price cap.
Allowing for recent rises in consumer prices, real total pay dropped in the year to October-December 2021. Excluding bonuses, average wages were down 1.2% — the biggest decline in nearly 8 years.
“The squeeze on firms’ finances from high inflation, soaring energy bills and the looming national insurance hike is likely to weaken job creation and further restrain pay growth in the coming months,” said Suren Thiru, head of economics at the British Chambers of Commerce.
“With high economic inactivity indicating that many people have left the jobs market altogether, chronic staff shortages are likely to weigh on the U.K. economy for a sustained period.”
The ONS’ latest figures come as UK unemployment remained steady at 4.1% during the quarter, a figure which sits above pre-pandemic levels of 3.8%. The highest unemployment rate was in the North East of the country, at 5.6%. Meanwhile, the lowest was in Northern Ireland at 2.7%.