Fastest UK wage rise in 20 years fails to match inflation

UK workers are suffering real-terms pay cuts despite wages rising at the fastest rate for more than 20 years, latest data shows.

Average pay, both including and excluding bonuses, rose by 6.4% between September and November compared with the same period last year, according to the Office for National Statistics (ONS). The hike is the biggest since records began in 2001, aside from “jumps in the Covid-19 period which were distorted by lockdowns and government support measures”, said Reuters.

But wages fell by 2.6% in real terms, “because each pound buys you less and less”, said the BBC’s economics correspondent Andy Verity. With inflation still high – 10.7% in December – and the cost-of-living crisis continuing to bite, “it’s one of the biggest pay cuts in real terms that we’ve seen this century”, he added.

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The gap between wages in the private and public sectors has also widened, with private sector growth at 7.2% in the three months to November, compared with 3.3% in the public sector. The pay divide “will fuel the bitter stand-off between the government and striking public sector workers”, said the Financial Times.

Amid calls for government action to tackle the pay crisis, Chancellor Jeremy Hunt said that the “single best way to help people’s wages go further” was “to stick to our plan to halve inflation this year”. That response, said the FT, suggests that he “remains opposed to higher funding for government departments that would allow them to make a substantially better pay offer to NHS workers and teachers”.

Further inflation data due to be published tomorrow “is expected to show another monthly fall”, said the London Evening Standard, but “economists expect it to still be over 10%, continuing the strain on household budgets”.