Real wages have fallen at a record pace, with public sector workers seeing a particularly large blow to their incomes, while bankers are cheering for “extremely high” bonuses, official figures show.
In the three months to April, public sector workers’ wages rose 1.5% from a year earlier. Prices have risen much faster, with current inflation at 9 percent.
Private sector workers saw an average salary increase of 8 per cent over the period, the National Statistics Office said.
In the whole economy, real wages, adjusted for inflation and excluding bonuses, fell by 2.2%.
In April alone, wages fell 4.5 percent when adjusted for rising prices. This is the biggest drop since recordings began in January 2001.
When bonus payments are included, real profits rose 0.4 percent, largely due to the big payday in the City of London.
Bankers and professional service workers were treated with “extremely high” bonuses in March, ONS reported. Revenues from financial and professional services as a whole increased by 10.6%.
While the City received the largest increase in bonus payments, several other sectors also saw growth, ONS said.
In wholesale, retail, hotels and restaurants, wages rose by 8.4% between February and April 2022. However, the figures were compared with data from 12 months earlier, when a large number of hotel employees were on leave.
The decline in real wages in the economy as a whole came despite unemployment falling close to its 50-year low. The official unemployment rate fell by 0.2% to 3.8%, below pre-pandemic levels.
The number of workers in the United Kingdom on wages increased by another 90,000 (0.3%) between April and May to 29.6 million. Vacancies also rose to a new record of 1.3 million.
However, hundreds of thousands of people have left the labor market since the start of the pandemic due to factors including prolonged covid, mental illness aggravated by the blockade, or a decision to retire early. They are not included in the unemployment rate because they are not currently looking for work.
Experts warn that not enough people are looking for work and a shortage of workers could start to stifle economic growth.
Neil Carbury, chief executive of the Confederation of Recruitment and Employment, said the record number of vacancies meant a “great time” to look for work.
He added: “But employment is still lower than before the pandemic [times]and although economic inactivity declined during this quarter, it is still much higher than two years ago.
“There are still no signs of a slowdown in the labor market economy, but if we do not pay attention to the fact that there are not enough jobseekers, this could have another depressing effect on the UK’s economic growth.
The UK is also approaching a recession this year, after the economy unexpectedly contracted in April.
Sam Beckett, head of economic statistics at ONS, said the figures continue to show a “mixed picture” of the labor market.
“While the number of employees is growing again in the three months to April, the figure remains below pre-pandemic levels.
“Furthermore, although the number of people neither working nor looking for work has declined slightly in recent times, it remains well where it was before Covid-19.
She added: “The high level of bonuses continues to mitigate the effect of rising prices on the total income of some workers, but if you exclude bonuses, wages in real terms are falling at their fastest pace in more than a decade.
Jonathan Ashworth, secretary of Labor in the shadows for work and pensions, said: “With record job vacancies and inflation at its highest level in 40 years, ministers have shown full satisfaction with the huge levels of economic inactivity.
Chancellor Rishi Sunak said the figures show that the labor market “remains strong with minimum cuts”.
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