MILLIONS of workers are facing a cut to pay as inflation eats into household earnings, while unemployment rates rise.
New figures released today by the Office for National Statistics (ONS) show that regular pay in real terms fell by 2.6%.
Millions of workers hit by pay cut as real wages fall 2.6% and unemployment rises
The rate of UK unemployment rose to 3.7% in the three months to November, up from 3.5% in the previous three-month period, the ONS said.
It comes as the UK’s rate of inflation fell to 10.7% in November, after hitting a 41-year high in the previous month.
Prices are rising at a faster rate than pay, which means people’s incomes are squeezed.
Growth in average total pay (including bonuses) and regular pay (excluding bonuses) among employees was the same at 6.4%
For regular pay this is the strongest growth rate seen outside of the coronavirus pandemic period, the ONS said.
But, when adjusted for inflation over the year, total and regular pay both fell by 2.6%.
It’s a pay cut in real terms as wages are going up, and they don’t match the rate of inflation – which means people are effectively worse off.
Meanwhile, there were 1.161 million job vacancies on average across October to December 2022.
The ONS said that in the latest period the number of people out of work for up to six months rose, driven by 16 to 24-year-olds.
ONS director of economic statistics Darren Morgan said: “In the most recent three months, employment levels were largely unchanged on the previous three months.
“Unemployment rose, driven by more young people who have only recently become unemployed, overall there was a small increase in people actively engaged in the jobs market, whether working or looking for work.
“Vacancies fell again, though remaining at very high levels, with the number of people looking for work broadly in line with the number of jobs being advertised.
“The real value of people’s pay continues to fall, with prices still rising faster than earnings.
“This remains amongst the fastest drops in regular pay since records began.”
It follows official data last week revealing the economy unexpectedly grew by 0.1% in the month to November.
However, the ONS said that in the three months to November, gross domestic product (GDP) fell by 0.3%.
Alice Haine, Personal Finance Analyst at Bestinvest, said: “While the economy grew by a surprise 0.1% in November, raising hopes that the dreaded recession might be avoided, the double hit of persistently high inflation and rising
interest rates will take their toll on households and businesses at some point meaning a downturn is still very likely – albeit a shallower one that starts a little later than expected.”
