Wage Cuts

More than 10 million workers received a pay rise of 1% or less last year, according to official figures that highlight the growing concentration of workers at the bottom of the pay scale.

The Office for National Statistics said almost 32% of Britain’s workforce of 32.5 million people were given an increase that was less than one-third of the inflation rate, which reached 3.1% in November 2017.

Most workers lost out last year, the ONS said, after it found the median gross weekly earnings for full-time employees grew by 2.2%.

The figures showed employers barely reacted to the inflation spike last year, when they paid employees much the same as in 2016, when inflation was below 2%, and in 2015, when inflation fell to almost zero.

The ONS said much of the 1% cap affected the 5.3 million workers in the public sector, many of whom are better educated and higher paid than the average across the workforce. But millions of private sector workers were also affected by wage rises of 1% or less, leading to a greater concentration of workers on the bottom rungs of the pay ladder.

Many were protected by the “national living wage”, which increased by 4.2% on 1 April 2017 from £7.20 to £7.50. Workers on wages above this level, however, were among those to receive either no rises or low ones, leading to clustering around the minimum wage, according to the ONS.  The ONS said: “In 2017, there was a continuation of the trend for a growing concentration of pay at the lower end of the UK’s earnings distribution, clustered around the national living wage. Of all employees, 31.6% experienced less than or equal to 1% nominal earnings growth, partially reflecting the wage restraint for public sector employees.”

Figures showed the NLW has succeeded in pushing up low earners’ wages, but employers have saved money by squeezing pay differentials, with those workers paid just above the minimum level.

The figures were released less than a week after the chancellor was accused of delivering a budget that will overwhelmingly benefit richer households. They will fuel concerns that many employees have missed out, as cuts to in-work benefits over the next four years drive down low-paid workers’ incomes further.