Bloomberg News reports that the wages in the United Kingdom dropped at the steepest pace since the financial crunch of 2010, thereby underscoring the tightening pressure that households are being subjected to and consequently squeezing their expenses and putting a curb on their cost of living.
After adjusting for inflation, it was also seen that the real wages dropped by 2.6% in the year through April. The Office revealed this for National Statistics Wednesday. This figure is the most since a decline of 3.3% between 2010 and 2011. This also coincides with the recession that took place a decade ago.
Inflation has been at an all-time high in the last 40 years, and this is eating away 5% of the increase that is taking place in the headline level of wages. This is adding to the pressure on the already pressurized central bank to rein in the price increase and on the government to help those households that have been struggling.
Rising Wages but Undershoot Inflation in April
Due to a shortage in labor, the wages are escalating, driving up the salaries albeit risking inflation. As per hours of the annual survey of ONS and earnings, it put the median UK wage at £640 per week in April. This figure was up from £610 compared to just one year earlier. The increase is due to the post-pandemic rebound of the hospitality market.
Bloomberg News also reports that wages related to accommodation and sectors in food services escalated the earlier in the year. The government’s furlough program was abandoned by the workers, which had shelled out 80% of the normal salaries to the workplaces that were compelled to stop operations and close down. The return to these workers’ jobs and their normal levels of pay boosted the headline figures related to earnings. Services industries were found to have reported having paid a higher wage for drawing in the staff that was required for reopening.
The lower-paying jobs, including heavy industry and factory wager, also received a boost. The payout across all types of employment continued to surge in April, offering further credence to the fears of the policymakers that higher salaries will only add up to inflation.
David Freeman, the head of the labor market and household statistics at ONS, noted that lower-paying jobs tend to witness relatively bigger growth in earnings in the current year. He said that it is partly because the groups were affected by the furloughing in 2020 and 2021; however, they have also particularly benefited from the surge in the national minimum wage.
