Wages dropped by 3.4% in April alone, the greatest fall for over two decades

Wages are plummeting at the fastest rate since January 2001 when records began, new data released by the Office for National Statistics has shown. 

Earnings dropped 3.4 per cent in April on the same period last year when accounting for price inflation, the figures show. This translates into real wages down by £26 per week, or £114 a month, compared to last year – the worst single month pay growth on current records.

In the three months to April, public sector workers saw their wages rise by just 1.6 per cent compared with the same period last year, while the price of everyday essentials, measured by the inflation rate, has risen by 9 per cent and is expected to soon reach 10 per cent.

Private sector workers, on the other hand, saw an average pay rise of 8.2 per cent, almost keeping up with inflation.

Greg Thwaites, research director at the Resolution Foundation, described the situation as “the deepest pay squeeze in over a decade”, adding: “Britain is in the midst of the highest inflation in four decades, and a recovery that has run out of steam.”

While March saw unemployment at a 50-year low, short-term unemployment has risen over the past few months for the first time since 2020. Total unemployment rose in April. 

The number of vacancies has reached yet another record high of 1.3 million, having continued to increase from a former record of one million in October last year.

“On the one hand, vacancies are at a record high; on the other, unemployment has started to tick up,” said Thwaites. “If this continues, families may start to find it harder to work more if they’re feeling poorer, but the Bank of England may feel more confident that it can avoid domestic inflation pressures spiralling.”

The Trades Unions Congress has accused the government of “doing nothing” to stop real wages “falling of a cliff”.

“Millions of workers are being forced to choose between paying their bills or feeding their families. That isn’t right,” said TUC general secretary Frances O’Grady.

“We urgently need action to get people the pay rise they deserve. That means boosting the minimum wage, a real public sector pay rise, and the government supporting – not attacking – unions who are campaigning hard for fairer pay.” 

Responding to the labour market figures, Chancellor Rishi Sunak said:  “Today’s stats show our jobs market remains robust with redundancies at an all time low.

“Helping people into work is the best way to support families in the long term, and we are continuing to support people into new and better jobs.

“We are also providing immediate help with rising prices – 8 million of the most vulnerable families will receive at least £1,200 of direct payments this year, with all families receiving £400.”