Inflation Nation: Average Wages in Britain Fall at Fastest Rate on Record

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Kurt Zindulka

The buying power of the average wage for British workers is falling at the fastest rate on record, as the inflationary crisis has wiped out all gains in salary and bonuses.

Figures released by the Office for National Statistics (ONS) on Tuesday showed that regular pay, which excludes bonuses, fell by 4.5 per cent over the past month when taking inflation into account, the sharpest decline since comparable records began in 2001. Even when taking bonuses into account, wages still fell by 3.7 per cent, however, this figure was bolstered by high payouts in the financial services sector, the ONS said.

Inflation, which has hit the highest level since the 1980s as a result of years of government mismanagement, months of lockdown policies, and now exacerbated by the war in Ukraine eliminated the increases in salaries, which rose by 4.2 per cent without bonuses.

The director of the Institute for Employment Studies Tony Wilson told The Guardian: “This is really grim news on pay and is only likely to get worse,” adding: “Despite the tightest labour market on record, nominal pay is broadly flat meaning that rocketing inflation is leading to the largest cuts in real pay in at least two decades.”

The release of the dire economic figures comes one day after the ONS announced that the UK’s GDP declined by 0.3 per cent in April after falling 0.1 per cent in March, sparking fears that the country is heading into a recession.

The official statistician reported that services (0.3 per cent), production (0.6 per cent), and construction (0.4 per cent) all declined in April, the first time all three sectors have declined at the same time since January of last year.

There was some room for quiet optimism on Tuesday, however, as the ONS showed that the number of people on payrolls rose by 90,000 between April and May, totalling 29.6 million. While unemployment increased slightly from 3.7 per cent to 3.8 per cent, it still remains at nearly a 50-year low.

Job vacancies also hit an all-time high of 1.3 million, while redundancies fell to a new low of 2 per cent in the three months to April.

Chancellor of the Exchequer Rishi Sunak said that the employment figures show that the UK jobs market “remains robust with redundancies at an all-time low”.

However, Labour’s Shadow Work and Pensions Secretary Jonathan Ashworth said: “Work should be the best defence from the rising cost of living, yet millions in work are in poverty, real wages are plummeting, the numbers in overall employment are below pre-pandemic levels, and the numbers on out-of-work benefits not looking for work is higher than pre-pandemic.”

So far, the nominally Conservative government of Prime Minister Boris Johnson has refused to ease the tax burden on the British public, which has hit a seventy-year high. Despite calls from Tory MPs to cut taxes, the government has argued that doing so may add to the inflation crisis.

Commenting on the prospect of reducing taxes, Mr Johnson said on Monday: “Yes, of course, I understand that we need to bear down on taxation and we certainly will.”

Yet, the PM said that there is an “inflationary spike that we’ve got to get through right now, looking after people as we go through that. And that is what we’re going to do”.

Follow Kurt Zindulka on Twitter here @KurtZindulka

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