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Real pay falls as inflation rises

Updated: Nov 7, 2023

According to the Office for National Statistics, the real value of pay has fallen by 3% between April and June.

Although average wages rose by 4.7%, last quarter, inflation rose to a 40-year high, and is set to climb higher. This makes the gap between pay growth and inflation the largest since records began.

Darren Morgan, director of economic statistics at the ONS said:

"Excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001,"

Private sector wages grew by 5.9% whilst those working in the public sector saw pay growth of only 1.8%, again the largest difference between public and private sector wage growth in 20 years.

Last month, the government announced pay rises for millions of public sector workers. However, most of these increases were below the current rate of inflation of 9.4%. As a result, the rising cost of living has promoted calls from workers and unions for pay rises.

More than 40,000 railway workers are set to go on strike this Thursday and Saturday, with disruption expected Friday as a result of disputes over pay.

The ONS said the number of people in full-time employment has gone up and the numbers of part-time workers and self-employed are slowly recovering from the early stages of the Covid pandemic.

The leap in regular pay growth to 4.7% suggests a tight labour market at the moment as there is still a demand for labour although softer economic growth in the second half of the year might dampen demand.


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