Your Pay Is Still Falling In Real Terms, Unless You Got A Bonus

The Pay Squeeze Is Over (But Only If You Got A Bonus)
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The coalition has received a boost from the news that average pay rises have outstripped inflation for the first time in four years in a sign of the squeeze on wages easing, but the picture is still gloomy for those who don't get bonuses.

Britons' pay packets were 1.7% higher in the year to February, compared to the latest CPI inflation rate of 1.6%, however if you strip out bonuses, the pay growth falls to a below-inflation rate of 1.4%.

Pay for Britons working in the private sector rose 1.8%, excluding bonuses, which is marginally above the rate of inflation. However for those in the public sector, pay rose by just 1% if bonuses are excluded.

Alongside the latest pay growth figures, David Cameron welcomed the news of improving job figures, tweeting: “Employment rises to record 30.39m - an extra 239,000 people with the security of a job and hope of a brighter future.”

Mark Serwotka, general secretary of the Public and Commercial Services Union, told HuffPostUK: "With normal pay and public sector wages still lagging behind the official inflation figures, and way behind the true cost of living, and the report today showing almost one million people last year were helped with food parcels by the Trussell Trust alone, it's clear our economy is very far from showing signs of a recovery for all.

"The rise in employment is being fuelled by a massive increase in self employment which, for many, will mean insecurity and low pay and also mask the huge numbers of people forced to do unpaid work on government schemes.

"Wealthy Tory politicians and their allies in big business might not be suffering but in the real world, austerity is taking its toll."

Experts pointed out that the decision by many banks to delay paying bonuses until chancellor George Osborne scrapped the 50p top rate of income tax could mean the bonuses were even higher this year.

Dr. Howard Archer, Chief UK economist at IHS Global Insight, said: "A number of companies delayed paying bonuses in 2013 to April due to the cut that month in the top rate of income tax from 50% to 45%. This obviously affected only the top earners, many of whom would have been in the financial sector."

George Osborne said that the Office for National Statistics' latest figures further vindicated his economic strategy, but admitted: “These remain difficult times for families facing pressures on their budgets, and much work needs still to be done to build a resilient economy."

GMB general secretary Paul Kenny said: "The recovery under way is welcome but we have a very long way to go to climb out of the hole caused by the recession.

"Given the increase in population, GDP per head is still 5.8% below 2007 levels.This is the root cause of average earnings being down 13.8% in real terms since then. The pay of the bottom 50% of the workforce is still being squeezed."

The Office for National Statistics also revealed that Britain's unemployment rate had fallen below 7% for the first time in five years, with the number of people out of work at just 2.24 million. The rate, at 6.9%, compares to 7.2% in the previous quarter.

Self-employment rose by 146,000 to 4.5 million, the highest since records began in 1992. Long-term and youth unemployment have both fallen.

The number out of work for more than a year has been cut by 32,000 to 807,000, while the jobless figure for 16 to 24-year-olds has fallen by 38,000 to 881,000, the lowest for five years.

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