Real value of UK pay continues to slide as inflation bites
The real value of UK workers’ pay has continued to fall at the fastest rate for more than a decade, as wage increases in February were outstripped by high inflation.
The Office for National Statistics said annual growth in average pay, excluding bonuses, held steady at 6.6% in the three months to February despite a small rise in unemployment and decline in the number of job vacancies.
Fuelled by bumper pay for bankers and accountants in the City of London, wage growth including bonuses rose by 5.9%. Economists had forecast weaker rates of pay growth, in a potential dilemma for the Bank of England as it considers whether to raise interest rates for a 12th consecutive time in May.
However, the ONS said total pay fell by 4.1% on the year after taking inflation into account – among the largest falls since 2009.
Reflecting softer conditions in the jobs market as Britain’s economy struggles for growth momentum, the unemployment rate unexpectedly rose to 3.8%. The number of job vacancies also fell for a ninth consecutive month, although remained high at more than 1.1m as companies struggle to recruit staff.
The chancellor Jeremy Hunt said: “While unemployment remains close to historic lows, rising prices continue to eat into pay cheques which is why halving inflation this year is one of our top economic priorities.”
The latest snapshot showed a rise in the number of working days lost to strikes in February amid industrial action by civil service staff and teachers, with 348,000 working days lost during the month.
Average wage growth in the public sector picked up to 5.3% on the year, the fastest annual rate since 2005, although continued to lag behind wage growth of 6.9% in the private sector.
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