Real wages plunge as cost of living crisis hits public sector workers hardest Business News

Real wages fell sharply, with public sector workers seeing their incomes particularly hit while bankers toasted “extremely high” bonuses, according to official figures.

Public sector workers saw their wages rise 1.5% in the three months to April from a year earlier. This is well below the current inflation rate of 9%.

Private sector workers saw their wages increase by an average of 8% over the period, the Office for National Statistics said.

In the economy as a whole, the real wage, adjusted for inflation and excluding bonuses, fell by 2.2% during the quarter.

In April alone, wages fell 4.5%, after adjusting for soaring prices. This is the steepest drop since records began in January 2001.

When bonuses are included, real earnings increased by 0.4%, mainly due to exceptional pay in the City of London.

Bankers and professional services workers received “extremely high” bonuses in March, the ONS said. Compensation across all financial and professional services rose 10.6%.

The fall in real wages across the economy has occurred despite unemployment falling to its lowest level in 50 years. The official unemployment rate was 3.8%, meaning it is below pre-pandemic levels.

However, hundreds of thousands of people have left the labor market since the start of the pandemic. They are not counted in the unemployment rate because they are not currently looking for work.

The UK is moving closer to recession this year after the economy unexpectedly contracted in April.

Sam Beckett, head of economic statistics at the ONS, said: “Today’s figures continue to show a mixed picture for the labor market.

“While the number of people in employment is up again in the three months to April, the figure remains below pre-pandemic levels.

“Furthermore, although the number of people not working and not looking for work has decreased slightly over the last period, it is still well above what it was before Covid-19 hit.

“At the same time, unemployment is near a 50-year low and there have been a record number of layoffs.

“Vacancies also continue to slowly increase. At a new all-time high of 1.3 million, that’s more than half a million more than before the pandemic began.”

She added: “High bonuses continue to cushion the effects of higher prices on total earnings for some workers, but if you exclude bonuses, real wages are falling at their fastest rate in more than of a decade.”