UK Wage Hikes Wiped Out to Zero by Soaring Inflation Rate

In this posed photograph a person is pictured holding a wallet containing a £5 (five poun
JUSTIN TALLIS/AFP via Getty Images
Kurt Zindulka

Inflation has nullified increases to wages in Britain last year, with workers experiencing a decline in pay in real terms in November, the Office for National Statistics (ONS) revealed on Tuesday.

The latest report on average weekly earnings from the UK’s official statistician body found that in the three months leading up to November, wages — excluding bonuses — rose by 3.8 per cent compared to the same time period in the previous year.  However, due to rising inflation, which has hit a ten-year high, wage rises were reduced to zero per cent in real terms.

The ONS report went on to say that in November, weekly earnings fell for the first time since July of 2020, with a decline of one per cent and 0.9 per cent including bonuses.

Director of employment for the Confederation of British Industry, Matthew Percival told Sky News: “Rising inflation means that squeezed incomes joins the difficulties firms are facing filling vacancies as major challenges in the UK labour market.”

The independent Resolution Foundation think thank said that it was the third time since the start of the decade that households have seen their take-home pay decline, noting that the situation is only expected to worsen as the year continues.

Currently, inflation in Britain is sitting at around 5.1 per cent, the highest in ten years. However, it is believed that it could rise to 6 per cent within the coming months following the expected energy price cap hike in April by the national regulator Ofgem, with annual bills set to hit £2,000.

The energy crunch could see some 6 million households into fuel poverty if actions are not taken to alleviate the crisis, charities have warned.

In addition to the rising cost of living and stagnant wages, the supposedly Conservative government of Prime Minister Boris Johnson is set to increase taxes to a seventy year high, despite an electoral pledge to not raise taxes.

The British economy is also facing a shortage of workers, with a record 1.247 million job vacancies reported in the three months to December, with a record 4.1 openings per 100 employee jobs.

One sign of optimism was the employment rate, with unemployment falling from 4.2 per cent to 4.1 per cent, with 184,000 people added to payrolls during the same time period.

In total, 29.5 million people are currently employed in the British economy, 409,000 than were employed during the pre-pandemic month of February 2020.

“Today’s figures are proof that the jobs market is thriving, with employee numbers rising to record levels, and redundancy notifications at their lowest levels since 2006,” Chancellor Rishi Sunak said.

Trades Union Congress General Secretary Frances O’Grady said: “While it’s good to see employment continuing to rise, on pay it’s the same story of a squeeze on workers.

“Working people deserve a decent standard of living and a wage they can raise a family on.”

Follow Kurt Zindulka on Twitter here: @KurtZindulka

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