Tuesday, January 18, 2022

Squeezed again

 Pay for workers in Britain has fallen in real terms. 

Average wages, after taking account of inflation, dropped in November for the first time since July 2020 

The Office for National Statistics said although average total earnings grew at an annual rate of 3.5% in November, the impact from soaring rates of inflation meant workers suffered a real-terms cut in their pay packets. The official rate of inflation reached a 10-year high of 5.1% in November, effectively meaning a 1.6% cut in pay.

While total pay including bonuses edged up 0.4 percentage points to 4.2% on the previous month, without bonuses pay remained static. Once inflation was taken into account wages went into reverse in real terms, declining by 0.9%, even when bonuses are included.

The Resolution Foundation thinktank said this squeeze on pay was the third in a decade, after real wage falls after the financial crisis between 2011 and 2014 and in the year after the 2016 Brexit vote.

Hannah Slaughter, a senior economist at the Resolution Foundation, said, “Despite widespread talk of returning wage spirals, Britain is instead experiencing the return of shrinking pay packets,” she said. “The latest period of falling real wages – the third in a decade – is likely to have started as a far back as last summer, and is likely to continue beyond next summer too.”

Frances O’Grady, the general secretary of the TUC, said, “Working people deserve a decent standard of living and a wage they can raise a family on. But instead, following the worse pay squeeze for two centuries, real pay is falling, and they now face a cost-of-living crisis,” she said.

UK workers’ pay rises fall behind inflation amid cost-of-living crisis | Economics | The Guardian

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