Pay growth remains strong, especially for regular pay, but inflation still is very high, placing pressure on the “real” incomes of many workers.
Average regular pay (excluding bonuses) increased by 6.6% year-on year in the period between December 2022 to February 2023. This rate of growth is very strong by historic standards.
Average pay, including bonuses, in the UK was £638 per week in February 2023, up 5.9% year-on-year.
One reason for rising pay is public sector pay change. The gap between private and public sector pay is narrowing.
Average regular pay growth was 7.0% for the private sector and 4.8% for the public sector. This is the largest growth for the public sector, outside of the pandemic period, since early 2006.
Rising public sector pay may explain why industrial disputes are down, at 348,000, compared to the December peak of 822,000.
However, even the growth in regular pay, 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 7.6% year on year.
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