Higher inflation squeezes pay packets

14 Jun 17

The amount workers take home a week has been squeezed by inflation although unemployment has dropped, official figures have revealed.

Average weekly earnings – adjusted for inflation - fell by 1.2% in the public sector and 0.5% in the private sector in the three months to April compared to the same period the year before, Office of National Statistics out today have shown.

ONS inflation figures out yesterday showed inflation had hit 2.9% - which means pay packets are pinched as that is more than the growth of basic pay in the UK in the three months to April, which was 1.7% year-on-year. 

Although, today’s jobs report also showed the unemployment rate remained at a 42-year low of 4.6% and the jobless number fell by 50,000 in the three months to April.

When bonuses were included wage growth hit 2.1%, which is still below inflation, the official figures out today showed.  

The ONS June report stated: “Taking into account recent increases in inflation, real average weekly earnings decreased by 0.4% including bonuses and by 0.6% excluding bonuses in the 3 months to April 2017 compared with the same period a year earlier.

“This is the first annual decline in total real average weekly earnings since 2014.”

Nominal average weekly earnings - excluding bonuses - increased by 1.1% in the public sector and 2% in the private sector.

Frances O’Grady, trade union TUC general Secretary, said: “Real wages have fallen for the second month in a row.

“Unless the government gets its act together, we’ll soon be in the middle of another cost of living crisis.

He added: “Ministers must focus on delivering better-paid jobs across the UK. And it’s time to bin the artificial pay restrictions on nurses, midwives and other public sector workers.”

Think-tank Resolution Foundation described the figures as “terrible news” for workers’ pay.

Stephen Clarke, economics analyst at the foundation, said: “Britain is in the middle of a pay squeeze that is far deeper than anyone expected."

Debbie Abrahams, Labour's shadow work and pensions secretary called on Theresa May to step aside as her "coalition of chaos" wasn't doing enough to help working families suffering with stagnating wages.

Secretary of state for work and pensions, David Gauke welcomed the figures which show employment has hit 74.8%, with 31.95m now in work.

“This is yet another strong set of record-breaking figures with employment up and unemployment down, fuelled by full-time opportunities,” said Gauke.

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