Yahoo Finance UK real pay falls at fastest pace since 2010 financial crisis
UK pay has tumbled at the sharpest pace since 2010, adding further pressure to households already struggling with the cost of living crisis.
Real wages adjusted for inflation fell 2.6% in the year to April, the sharpest drop since the 3.3% decline during the 2010 financial crisis, the Office for National Statistics (ONS) said.
Its survey of earnings on Wednesday revealed that the median UK wage was £640 a week in April, up from £610 the previous year. This was driven by the post-pandemic rebound of hospitality industries.
Wages in the accommodation and food services sectors rose the most on prior year, while companies in the service industry said they had to pay higher wages to entice more staff.
Lower paying occupations like heavy industry and factory workers also received a boost.
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“Lower-paid occupations tended to see the biggest relative growth in earnings in 2022,” said David Freeman, head of labour market and household statistics at the ONS. “Partly this might be because these groups were most affected by furloughing in 2020 and 2021, but they have also particularly benefited by increases in the national minimum wage.”
“Average paid hours worked for all employees stayed the same between 2021 and 2022, after increasing 1.5% between 2020 and 2021; as with last year, those aged 60 years and over saw an increase in mean paid hours and those aged 18 to 21 years continued to decrease.”
The average annual pay for full-time employees rose to £33,000 by the end of the 2021-22 tax year, with average weekly earnings among full-time employees increasing by 5% in April 2022 compared with April 2021.
This growth is the highest since comparable records began in 1997, but is partially affected by employees on furlough in April 2021.
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The survey also showed that 509,000 people were paid below the national minimum wage this year so far, compared with 409,000 in 2019.
“While the year-on-year data on wages is skewed by the furlough scheme, looking at long-term trends, it is clear that rampant inflation has eroded pay packets, with wages for both full-time and part-time employees among the largest falls seen since comparable records began,” Myron Jobson, senior personal finance analyst at Interactive Investor, said.
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“Data on wage inflation often doesn’t reflect reality for workers. Monthly updates on employee earnings do not reflect the fact that many workers are likely to receive pay rises on an annual basis – if at all. But we are seeing the impact of rampant inflation more frequently, from the amount we spend to put food on our tables, to the cost of gas and electricity.
“Looking ahead, if red-hot inflation comes off the boil as hoped, pay rises could finally catch up to price rises. This would help improve workers’ living standards. But reining in inflation remains a tall order for policymakers.”
It comes as inflation is currently sitting at 10.1%, the highest level in 40-years, eating away at the 5% increase in the headline level of wages.
The Bank of England is under pressure to raise interest rates to tackle UK inflation, while the government is facing calls for more support for households.
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