finance news

UK cost-of-living crisis: employee wages fall behind inflation

UK cost-of-living crisis: employee wages fall behind inflation
UK cost-of-living crisis: employee wages fall behind inflation

Worker pay in the United Kingdom has reportedly fallen in actual terms with inflation for the first time in over a year, regardless of signs that companies ignored concerns about the Omicron variant and continued hiring through December.

After accounting for inflation, average salaries supposedly fell in November for the very first time after July 2020, raising concerns about the impact of high inflationary pressures and energy prices on the standard of living this year.

According to the Office for National Statistics, though average total wages climbed at a 3.5% annual rate in November, the impact of rising inflation implied that workers' pay packets were slashed in real terms. In November, the official rate of inflation hit a 10-year high of 5.1%, implying a 1.6% reduction.

Using its favored measure of consumer price inflation, which includes owner-occupier housing expenses, it reported that real-terms wages fell in November at a 0.9% annual rate.

Notwithstanding the effects of Omicron and a deepening pay crunch, the recent labor market snapshot shows solid growth in creating jobs. As per HMRC data, the number of workers on UK corporate payrolls increased by 184,000 last month to 29.5 million, up 409,000 from pre-pandemic figures, as the job market recuperates from Covid-19.

Given the recent downturn in the growth rate, the number of job opportunities surged to a record 1.2 million in the three months to December, indicating labor shortages across the economy.

Inflation is projected to have risen to its highest level in December in nearly a decade, according to official estimates. The Bank of England has warned that inflation may reach up to 6% in April, up from 5.1% now.

Even after Boris Johnson's pledge to make England a ‘high skill, high wage’ economy, Labour and union leaders have stated that the government needs to respond to the living costs crisis urgently. They also accused it of failing to raise levels of pay.

The redundancy rate, which counts the number of individuals laid off for every 1,000 workers, fell to the lowest point in more than a quarter-century.

Source credit: https://www.theguardian.com/business/2022/jan/18/uk-workers-pay-rises-inflation-unemployment-covid

About the author

Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for newsorigins.com, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.