Figures published by the Office for National Statistics [ONS] show that wages are increasing at the fastest rate since 2000 excluding the Covid-19 pandemic years, but this is being cancelled out in real terms by higher inflation.
In the year to September 2022, regular wages rose by 5.7 per cent, but they fell by 2.7 per cent with inflation factored in.
Part of the driver behind rising wages is the fact that low unemployment – standing at 3.6 per cent in the three months to September 2022 - is in tandem with near record job vacancies, meaning that employers have had to increase salaries to attract talent to fill job roles.
There is also a record disparity between pay rises in the public and private sector excluding the pandemic years, with the ONS indicating that pay increases in the public sector (2.2 per cent) lagged behind the private sector (6.6 per cent).
Darren Morgan, the ONS director of labour and economic statistics, said that with wages down in real terms, it was unsurprising that official figures also uncovered that “well over half a million working days (were) lost to strikes” in August and September 2022, with the majority being in the transport and communications sectors.
Morgan said: “With real earnings continuing to fall, it's not surprising that employers we survey are telling us most disputes are about pay.”
Chancellor Jeremy Hunt said that people’s “hard-earned money isn’t going as far as it should” and that tackling inflation was his “absolute priority”.
Hunt said that the need to grip inflation would guide “the difficult decisions on tax and spending we will make on Thursday” as he prepares to deliver the government’s fiscal statement on November 17.
The Times has reported ahead of the statement that Hunt will announce increases in the national living wage with targeted cost-of-living support going to vulnerable households.
The statement will come after the Bank of England forecast that the country will face a recession that will last for the next two years, with unemployment doubling by 2025.
Labour shadow chancellor Rachel Reeves said that the real terms drop in wages and the state of the economy was down to “12 years of Tory economic mistakes”.
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