MILLIONS of workers are facing a cut to pay as inflation continues to eat into household earnings.
Figures released today by the Office for National Statistics (ONS) show that total pay in real terms fell by 3.1%.
Regular pay in real terms fell in the three months to December 2022
The unemployment rate also increased in the three months up to December
The rate of UK unemployment also remained largely unchanged at 3.7% in the three months leading up to December, up from the previous three-month period, the ONS said.
The number of people unemployed for up to six months increased, driven by people aged 16 to 24 years.
Those unemployed for over six, and up to 12, months also increased, while those unemployed for over 12 months decreased in the recent period.
The UK’s rate of inflation dipped to 10.5% in December, after hitting 10.7% 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 6.7% – the fastest rate in 20 years.
And for regular pay, this is the strongest growth rate seen outside of the coronavirus (COVID-19) pandemic period.
But, when adjusted for inflation over the year, total and regular pay both fell by 3.1% and 2.5%.
Darren Morgan, director of economic statistics at the ONS said: “Overall pay continues to be outstripped by rising prices.”
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.
Chancellor Jeremy Hunt said: “In tough times unemployment remaining close to record lows is an encouraging sign of resilience in our labour market.
“The best thing we can do to make people’s wages go further is stick to our plan to halve inflation this year.”
It comes as thousands of workers have gone on strike in recent months over pay.
Many are calling for higher increases to keep up with the skyrocketing prices of everyday items.
Royal Mail staff as well as train workers and nurses are among those striking.
The ONS said that there were 467,000 working days lost because of labour disputes in November 2022.
This is the highest number since November 2011.
What it means for your money
The main concern when workers see a “real terms” fall in their salary, is that their pay is not keeping pace with the cost of living.
Alice Haine, personal finance analyst at Bestinvest said: “With Britain’s unemployment rate remaining largely unchanged at 3.7% in the three months to December some might assume that all is well.
“Britain’s workers are seeing their disposable incomes hammered by higher prices – with the jump in wages unlikely to ease in the short-term as those feeling the pinch ask for pay increases to give their purchasing power a fighting chance against inflation.”
Wage growth is still way behind inflation as prices of everything from groceries to energy bills are going up at a much faster rate.
But a tight labour market could means it’s a good time to find a new job or ask for a pay rise.
It is likely you’ll still feel the pinch though as the cost of living crisis continues.
Energy prices, fuel and food are are among the essentials which have rocketed.
It means many are struggling to keep up, or have already fallen behind on bills.
What help can I get if I’m struggling?
Millions of households started receiving a £400 energy bill discount from October 1.
Households will have already received a £66 energy bill discount in October, November and £67 in December and January.
There will also be a payment worth £67 in January, February and March.
Between November and March 2023, a £300 one-off “Pensioner Cost of Living Payment” started being paid out to eight million households.
It is being given to those who already get the winter fuel payment – which is worth between £100 and £300 for those over state pension age.
Millions of households have also started to get the £150 Warm Home Discount between December and March 2023.
Check out more energy bill help you can claim, worth as much as £3,435 a year.
