UK living standards fall at record rate as inflation soars

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The Guardian

British workers’ living standards dropped in May at a record rate after pay rises failed to keep pace with inflation.

Earnings growth increased across the private and public sector by 4.3% in the three months to May excluding bonuses, the Office for National Statistics said, but that left pay down by 2.8% – a record fall.

Labour blamed the Conservative government for the fall in real wages, saying itleft people more exposed to inflation and the cost of living crisis”.

Average pay growth including bonuses for the private sector was 7.2% in the three months from March to May, while for the public sector it was 1.5%, leaving an average of 6.2%.

Strong bonus payments in some sectors gave a boost to the figures, the ONS said, with the financial and professional services and construction sectors seeing pay growth of 8.2% and 8.1%, respectively.

There was better news from figures showing the number of people in employment jumped in May.

More than 290,000 workers joined the labour market, about 120,000 more than forecast by City analysts. Meanwhile, unemployment remained steady at 3.8% and employers pushed up the level of vacancies to a fresh high.

But employers failed to attract many of the workers who quit the labour market during the pandemic to leave the employment rate of 75.9% below pre-pandemic levels.

And the cost of living crisis also worsened as pay failed to keep pace with rising prices, the Office for National Statistics said.

The ONS head of labour market and household statistics, David Freeman, described the figures as a “mixed picture” after the increase in people in work was offset by a persistent failure among most workers to protect themselves from inflation with a higher pay rise.

“The number of people in employment remains below pre-pandemic levels and, while the number of people neither working nor looking for a job is now falling, it remains well up on where it was before Covid-19 struck,” Freeman said.

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“With demand for labour clearly still very high, unemployment fell again, employment rose and there was another record low for redundancies.”

“Following recent increases in inflation, pay is now clearly falling in real terms both including and excluding bonuses.

“Excluding bonuses, real pay is now dropping faster than at any time since records began in 2001.”

July 19, 2022 at 02:57PM Phillip Inman

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