MILLIONS of workers are facing a cut to pay as inflation eats into household earnings.
New figures released today by the Office for National Statistics (ONS) show that regular pay in real terms fell by 2.7%.
Regular pay in real terms fell by 2.7% from August to October
It’s slightly smaller decrease than the biggest ever drop in April to June of 3%, but it’s still one of the largest falls seen since records began in 2001.
Data from the ONS revealed inflation hit a 41-year high of 11.1% in October.
Prices are rising at a faster rate than pay, which means people’s incomes are squeezed.
Growth in average total pay, including bonuses, was 6.1%.
Wages fell by 2.7% in the year August to October, both including and excluding bonuses.
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, the rate of UK unemployment rose to 3.7% in the three months to October, up from 3.6% in the previous three months.
ONS head of economic statistics Sam Beckett said: “This quarter the proportion of people neither working nor looking for a job fell, driven by a drop in the number of working-age people regarding themselves as retired.
“This tallies with other data which suggest more people in their 50s are thinking of going back to work, at a time when the cost of living is rising rapdidly.
“With more people re-engaging with the labour market, there were more in employment and also more who were actively looking for a job.
“Though job vacancies are still at a very high level, they continue to fall and are now lower than they were a year ago.”
It follows official data yesterday revealing the economy grew by 0.5% in the month to October.
However, the ONS said the three months to October saw the economy drop by 0.3% compared with the previous three months.
Chancellor of the Exchequer Jeremy Hunt said: “While unemployment in the UK remains close to historic lows, high inflation continues to plague economies around the world as we manage the impacts of Covid-19 and (Vladimir) Putin’s invasion of Ukraine.
“To get the British economy back on track, we have a plan which will help to more than halve inflation next year – but that requires some difficult decisions now.
“Any action that risks embedding high prices into our economy will only prolong the pain for everyone, and stunt any prospect of long-term economic growth.
“With job vacancies at near-record highs, we are committed to helping people back into work, and helping those in employment to raise their incomes, progress in work, and become financially independent.”
Some strikes were suspended in September for the State Funeral of Her Majesty.
But, the number of working days lost rose again in October, to the highest monthly level in over 10 years.
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.
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 (with high employment and lots of job vacancies) 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 other help can I get?
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 and November.
There will also be a payment worth £67 in December, January, February and March.
Households on pension credit or low incomes may qualify for the warm home discount scheme worth £150.
If you’re pregnant or have a child under the age of four, then you may qualify for Healthy Start vouchers to help pay for basic foods such as milk or fruit.
You can apply for free school meals for your child if you’re claiming certain benefits including Universal Credit.
British Gas has confirmed it’ll pay its most vulnerable customers grants worth £750 to help with sky-high bills.
For the full list of help available this winter see our guide.
Plus, here are five ways struggling families can get free cash to help pay for food this Christmas.
