Why Are Wages Below Inflation?

Britons saw their average pay rise by 6 per cent between June and August, but wages still failed to keep pace with runaway inflation. The government is on course for further clashes with public servants.

According to the data, regular pay was £574 in August 2022, while total weekly earnings were an average of £617. Before inflation, the income of private sector employees increased by 6.2%, nearly three times as quickly as that of their public sector counterparts, who saw their pay rise by 2.2%.

Although in cash income terms many people’s salaries increased, any increase was overshadowed by surging prices for fuel, food, gas, electricity, and other items, which have brought the overall inflation rate to 10.1%.

Big increases in pay are still not proving enough to offset the steep hikes in the cost of living, with inflation jumping back to a 40-year high in October.

The government has raised the National Living Wage to £9.18 an hour for workers aged 21-22, £9.50 for over-23s and £4.81 for apprentices to help tackle the mounting cost of living crisis.

The Bank of England has increased interest rates to help tackle inflation and has urged workers not to demand pay rises.

Experts believe the jobs market will falter as consumers cut their spending and firms are forced to slow hiring and rein in pay rises.