Pay rises at record rate, but continues to fall behind inflation

Date : 18 January 2023

New ONS data shows that average pay in the UK is rising at record rates, however, it continues to fall behind inflation.

Average weekly earnings in November 2022, including bonuses, were up 6.5% year-on-year. This is the strongest growth rate outside of the pandemic period.

However, even this growth, driven by high labour demand and limited supply, is unable to keep pace with inflation, with most workers seeing their wages fall behind the cost of living, meaning a “real terms” reduction.

Using the wider RPI measure of inflation, which gives a wide coverage of housing costs, “real wages” have been falling since October 2021 and are now down 7.1% year on year.

Click chart to enlarge

The gap between public and private sector pay continues to widen. Public sector pay growth in September was 3.3% year-on-year, versus 7.2% in the private sector. This gap has been building since around March 2021.

The widening gap is crucial to understanding why the number of working days lost to strikes has become more prevalent since Summer 2022.

The number of days lost over November 2022 was the largest number since November 2011. The figure for December is expected to be higher still.

More economic news and analysis

Sign up to our bulletin

Our round-up of the latest economic and political news, focused on FMCGs