UK workers saw their pay lag behind inflation at record levels over the past quarter, according to official figures. The Office for National Statistics (ONS) said regular pay, excluding bonuses, grew by 4.7% over the three months to June.
Analysts had predicted that wages would increase by 4.5%. It comes after CPI inflation hit a new 40-year record of 9.4% in June and is expected to peak at around 11% later this year.
The ONS said this resulted in a 3% drop in regular pay for employees once inflation is taken into account, representing the biggest slump since records began in 2001. Official figures also showed that the number of UK workers on payrolls rose by 73,000 between June and July to 29.7 million.
ONS director of economic statistics Darren Morgan said: “The number of people in work grew in the second quarter of 2022, whilst the headline rates of unemployment and of people neither working nor looking for a job were little changed. Meanwhile, the total number of hours worked each week appears to have stabilised very slightly below pre-pandemic levels.
“Redundancies are still at very low levels. However, although the number of job vacancies remains historically very high, it fell for the first time since the summer of 2020.”
Ben Harrison, Director of the Work Foundation at Lancaster University, a leading think tank for improving work in the UK, said: “Ahead of next week’s energy price cap announcement, there is more bad news for workers as real wages fell by a record 3% on the year. With inflation at 9.4%, and the Bank of England predicting it will peak at 13% in early 2024, people across the UK are facing more tough decisions as their regular pay fails to keep pace with rising prices.
“The six million workers in severely insecure jobs will be hardest hit and are already running out of options. Many have already tried to find more hours work and cutback spending but continue to face great uncertainty.
“With fuel bills about to soar again, hardworking families cannot wait any longer. The Prime Minister must return from holiday and agree a comprehensive package of support with the two Conservative leadership candidates.”
ONS director of economic statistics Darren Morgan said vacancies “remain at historically high levels”.
Speaking to BBC Radio 4’s Today programme, and asked if vacancies in the labour market have peaked, Mr Morgan said: “There’s been a lot of talk about whether vacancies have peaked… they did fall by a little bit in the latest three months, but the important thing to flag I think is that they still remain at historically high levels.”
He added: “There still remains a vacancy for every person unemployed, and that’s astonishing isn’t it? And that’s only happened for the first time in recent months.”
Asked what it says about the economy, Mr Morgan said: “I think what people will be looking at now… that it looks as though vacancies perhaps are starting to fall – we will wait and see. You know, will the number of vacancies continue to fall?”
He went on and questioned “is that because businesses are finding people to join them?” or “is it because businesses are withdrawing their vacancies because of concerns?”
In response to the latest labour market figures from the ONS, Chancellor Nadhim Zahawi said: “Today’s stats demonstrate that the jobs market is in a strong position, with unemployment lower than at almost any point in the past 40 years – good news in what I know are difficult times for people.
“This highlights the resilience of the UK economy and the fantastic businesses who are creating new jobs across the country.”
