2.8% fall in 'real wages' as pay fails to keep up with inflation
UK wages in May 2022 continued to be eradicated by rising inflation, with the value of employees’ regular pay falling by 2.8% despite employers awarding strong pay increases.
(Statistics based on May 2022 ONS figures)
The latest labour market figures from the Office for National Statistics (ONS) show that employees’ average total pay including bonuses grew 6.2% and pay excluding bonuses increased 4.3% in March to May 2022.
Alarmingly, when adjusted for inflation, which hit 9.1% at the consumer prices index measure in May 2022, pay including bonuses fell by 0.9% and regular pay by 2.8% compared with the same period last year.
The consumer prices index including owner-occupiers’ housing costs, which the ONS offsets its pay estimates against, rose to 7.9% in the 12 months to May 2022, up from 7.8% in April.
Average total pay growth for the private sector was 7.2% in March to May 2022, and for the public sector it was 1.5%. The finance and business services sector and construction sector showed the largest growth rates at 8.2% and 8.1%, respectively, partly because of strong bonus payments.
The Centre for Ageing Better highlighted the fact that 26.8% of all people of aged 50-64 are economically inactive, up from 25.4% before the start of the pandemic, and urged the next prime minister to make getting these people back into the workforce a priority.
CIPD labour market economist Jonathan Boys has reportedly said employers have a a role in helping staff through the cost of living crisis but acknowledged that many will not be able to afford pay awards that are in- line with or above inflation.
“Striking a balance between a fair pay award and addressing cost pressures will be a prominent theme for many employers this year,” he said. “CIPD research suggests that better use of existing benefits can have a similar effect to pay as it can make people materially better off. Certain fringe benefits can offset household costs like housing, travel, and childcare.”