Data released Tuesday from the UK Office for National Statistics showed that real wages fell at a record pace in June, while unemployment remained stable.
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LONDON – Real wages in the UK, which reflect the strength of workers’ wages, after factoring in inflation, have fallen 3% annually in the last quarter, according to data released Tuesday by the Office of National Statistics .
While average wages – excluding bonuses – rose 4.7% from April to June, according to the ONS, the cost of living is increasing even faster and outpacing wage growth.
Darren Morgan, ONS director of economic statistics, said this affected how far wages go in workers’ daily lives.
“Wage real value continues to fall. Excluding bonuses, it is still falling faster than at any time since comparable records began in 2001,” he noted.
Higher energy and food bills are putting pressure on UK households. The cost of living crisis has gripped the country and consumers’ purchasing power is declining.
UK inflation rose to a new 40-year high of 9.4% in June and is expected to top 13% in October. The Bank of England responded to rising prices earlier this month by raising interest rates by 50 basis points to 1.75%, the largest rise in 27 years.
Lauren Thomas, British economist at job site Glassdoor, said inflation and rising prices are workers’ biggest concerns right now.
“The only constant in 2022 will be change and skyrocketing prices. Even with high wage growth and a tight labor market, workers are feeling the bottleneck as inflation emerges as the biggest winner. With real wages falling by a record 3.0 percent Thanks to inflation, life is a priority for many job seekers,” she said.
The data from the ONS also showed that unemployment remained stable at 3.8%, while job vacancies fell over the same period.
James Smith, developed markets economist at ING, said the Bank of England will keep a close eye on both wage growth and unemployment in the UK.
“The official Bank of England forecasts point to a significant rise in unemployment in the coming years, but policymakers will look for signs that companies are ‘hoarding’ staff, even as margins are under pressure, amid concerns over their wealth. to re-enlist in the future again. Wage growth has some decent momentum now and the commission will be concerned that it can be sustained,” he said.
Looking ahead, this could mean further sharp rate hikes by the Bank of England, Smith adds:
“For now, we don’t think there’s much in these latest numbers that will stop the Bank of England from raising rates again by 50bp in September, even as we approach the end of the tightening cycle.”