Record pay growth in manufacturing helped push up the overall figure helped push average pay in Britain to a record $39,312, excluding bonuses, the country’s main statistical agency said Tuesday. File photo by Jeff Kowalsky/UPI
June 13 (UPI) — The wages of British workers rose at a record level in the February to April period as high inflation fed through to demands for higher pay, estimates out Tuesday from the country’s main statistical agency show.
Excluding bonuses, the speed at which pay grew surged to 7.2% in the February to April period compared with the same period in 2022 and 0.6% higher than the November to January period when wages jumped by 6.6%, according to the Office for National Statistics’ weekly earnings report.
Apart from an extraordinary period in 2021 when the economy was re-opening after COVID-19 lockdowns through most of the previous year, regular wage growth was the highest since records began in 2001.
The private sector saw the largest increases with pay growing by 7.6% while public sector wage growth was up by 5.6% as earnings continued their steady upward progression with the average weekly pay packet topping $756.
Within the private sector, finance and business services led the field with regular wages growing by 9.2%, followed by the manufacturing sector at 7%. The figure for manufacturing was the highest since comparable records began in 2001, ONS said.
“In cash terms, basic pay is now growing at its fastest since current records began, apart from the period when the figures were distorted by the pandemic. However, even so, wages continue to lag behind inflation,” ONS Economics Directors Darren Morgan said in a Twitter post.
High inflation — which was in double digits for most of the relevant period — meant workers saw their wages actually fall by 1.3% in real terms, the agency said.
Inflation fell to 8.7% in April, but a strong jobs market in which the total number of people in work hit a record 30 million saw employers competing for employees by offering higher salaries. Along with a 9.7% rise in the minimum wage in April, fears are growing that inflation is becoming embedded in the economy.
The numbers mean the Bank of England is almost certain to raise interest rates for the 13th consecutive time when it meets next week as it battles to prevent that from happening while at the same time avoiding snuffing out already anemic economic growth.
“Continued strength in pay growth” justified rates above their current 4.5%, KPMG Chief Economist Yael Selfin told The Guardian.
“The pickup in regular pay growth is the latest sign that inflation is driving up pay demands, which in turn is making inflation stickier. With negative productivity growth, these figures are well above the levels consistent with the 2% target,” she said.
“As higher interest rates feed through to the economy, we still expect the labor market to loosen. But even in that scenario, pay growth may continue to be inflationary as the moderation in prices will drive up real wages and strengthen workers’ purchasing power.”
Selfin added that the wages data had put an end to any lingering doubt and should solidify another rate rise by the bank, warning that more would be likely in the months ahead.
