UK Real Wages Fell at Sharpest Pace Since 2010 Financial Crisis
UK wages fell at the sharpest pace since the global financial crisis in 2010, underscoring the tightening pressure on households.
(Bloomberg) --
UK wages fell at the sharpest pace since the global financial crisis in 2010, underscoring the tightening pressure on households struggling with a squeeze on the cost of living.
Real wages adjusting for inflation fell 2.6% in the year through April, the Office for National Statistics said Wednesday. That’s the most since a 3.3% decline in the period from 2010 to 2011 that coincided with the recession more than a decade ago.
Inflation, which is lingering at its highest level in 40 years, is eating away at a 5% increase in the headline level of wages. That’s adding to pressure on the central bank to rein in price increases and on the government to help those families that are struggling.
The ONS’s annual survey of hours and earnings put the median UK wage at £640 a week in April, up from £610 the previous year. The increase was driven by the post-pandemic rebound of hospitality industries.
Wages in accommodation and food services sectors rose the most on prior year. Workers left the government’s furlough program, which had paid 80% of normal wages to those whose workplaces were forced to close. Their return to jobs and normal levels of pay helped boost the headline figures on earnings. Service industries reported having to pay higher wages to draw in the staff they needed to reopen.
Lower paying occupations like heavy industry and factory workers also received a boost.
Pay across all employment types continued to rise in April, giving further credence to policymakers’ fears that higher wages will add to inflation.
“Lower-paid occupations tended to see the biggest relative growth in earnings in 2022,” said David Freeman, head of labor market and household statistics at the ONS. “Partly this might be because these groups were most affected by furloughing in 2020 and 2021, but they have also particularly benefited by increases in the national minimum wage.”
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