Employees in the UK are seeing their pay rises wiped out by surging inflation, official figures show.
Growth in average total pay (including bonuses) in the three months to November 2021 was 4.2% and growth in regular pay (excluding bonuses) was 3.8%, the Office for National Statistics said. In real terms (adjusted for inflation), total and regular pay showed minimal growth in September to November 2021, at 0.4% for total pay and 0.0% for regular pay.
In November alone, average weekly earnings adjusted for inflation fell for the first time since July 2020, at negative 0.9% for total pay and negative 1.0% for regular pay.
A separate analysis of three-month changes in pay by the Resolution Foundation suggests that real wages actually started falling as far back as June 2021.
And the think tank warned that the the current period of shrinking pay packets “is likely to get worse” before starting to ease in the second half of 2022.
“Despite widespread talk of returning wage spirals, Britain is instead experiencing the return of shrinking pay packets,” said Hannah Slaughter, senior economist at the Resolution Foundation. “The latest period of falling real wages — the third in a decade — is likely to have started as a far back as last summer, and is likely to continue beyond next summer too.
“But while falling wages will add to the pressure on Britain’s cost of living crunch, the jobs market is in good health, with unemployment falling and employment rising late last year — a remarkable success given the damage inflicted by the pandemic.
“The big picture is that Britain will emerge from the pandemic with pay packets shrinking, and over half a million fewer people in the labour market. Both of these challenges will need to be addressed in 2022.”