Wages Stretched 'Further Than Ever' As Real Terms Pay Falls Again

"I appreciate that people’s hard-earned money isn’t going as far as it should," Chancellor Jeremy Hunt said.
A member of the public withdraws cash from a cash machine.
A member of the public withdraws cash from a cash machine.
John Keeble via Getty Images

Wages are being “stretched further than ever” as new figures show real terms pay fell again.

Pay packets are falling in real terms and the gap is widening between public and private sector pay, according to the Office for National Statistics.

Wage rises are being outstripped by rocketing prices, with average earnings excluding bonuses down 3.8 per cent when taking account of Consumer Prices Index [CPI] inflation.

This is slightly smaller than the record fall the ONS observed in April to June 2022 [4.1 per cent] but still remains among the largest falls the ONS has seen since comparable records began in 2001.

Chancellor Jeremy Hunt, who is due to unveil his big Autumn statement on Thursday, admitted that “people’s hard-earned money isn’t going as far as it should”.

Hunt added: “Putin’s illegal war has driven up inflation - a hidden and insidious tax that is eating into paychecks and savings.”

Rachel Reeves, Labour’s shadow chancellor, said the figures press home the impact of 12 years of “Tory economic mistakes and low growth”.

She added: “Real wages have fallen again, thousands of over 50s have left the labour market and a record number of people are out of work because they’re stuck on NHS waiting lists or they’re not getting proper employment support.”

Lib Dem treasury spokesperson Sarah Olney added: “This government’s economic mismanagement is leaving pay packets stretched further than ever before just as bills spiral out of control.

“This is the worst cost of living crisis in a generation and Thursday is judgement day for the latest Conservative chancellor in post.”

She said that due to Liz Truss’s “botched budget” and Tory economic mismanagement, homeowners were being forced to pay hundreds more each month on their mortgage.

“The public will never forgive Conservative MPs for this,” she added.

ONS director of labour and economic statistics Darren Morgan said: “With real earnings continuing to fall, it’s not surprising that employers we survey are telling us most disputes are about pay.”

The ONS also found that Britain’s rate of unemployment edged higher in the three months to September as the country heads for what is feared will be the longest recession in a century.

The rate of unemployment stood at 3.6 per cent in the three months to September, up from 3.5 per cent in the three months to August, the ONS said.

It came as more people dropped out of the workforce, with a hike in the proportion of people neither looking for work nor working.

Over half a million working days were lost to strikes in August and September – the highest two-month total in more than a decade – the ONS also revealed.

It follows official data last week revealing the economy shrank by 0.2 per cent in the third quarter, putting the UK on course for a prolonged recession amid the cost-of-living crisis.

The chancellor is expected to announce a “significant” rise in the national living wage on Thursday and give eight million households cost of living payments worth up to £1,100, according to The Times.


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