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Pay Decline and Rising Prices at Fastest Rate in a Decade

Pay Decline and Rising Prices at Fastest Rate in a Decade
Source: BBC

When growing costs are taken into account, regular pay is declining at the quickest rate in more than a decade, according to the Office for National Statistics.

When adjusted for inflation, salary excluding bonuses fell 2.2 percent between February and April compared to a year earlier, according to the ONS.

Fuel and energy prices are at an all-time high in the United Kingdom, putting a strain on household finances.

However, when inflation is taken into account, compensation, including bonuses, is exceeding price increases by 0.4 percent.

A “high level of bonuses” is continuing to “buffer the effects of rising prices on total wages for some workers,” according to Sam Beckett, head of economic statistics at the ONS.

“However, if bonuses are excluded, actual pay is declining at its quickest rate in over a decade,” she noted.

The new numbers, according to Chancellor Rishi Sunak, demonstrate that the UK’s labor market “remains solid,” with redundancies at an all-time low.

“Helping individuals get employment is the greatest approach to support families in the long run,” he said, adding that “we are continuing to help people get new and better positions.”

Labour’s Jonathan Ashworth, on the other hand, said that “millions of people in work are poor” and accused governments of “total complacency” in the face of “massive amounts of economic inactivity.”

Regular compensation has decreased by around 1.6 percent in the private sector and 4.5 percent in the public sector when adjusted for inflation.

The new salary numbers are being compared to the same period in 2021, when Covid limitations were in place and some staff were furloughed, according to the ONS.

From March to May, the number of job openings in the UK reached a new high of 1.3 million, according to the ONS.

In the month of February to April, the unemployment rate was 3.8 percent, up marginally from the previous month, while the employment rate was 75.6 percent, still lower than before the epidemic.

With a record number of job openings, Neil Carberry, chief executive of the Recruitment and Employment Confederation, noted that “compensation is expanding substantially as employers strive to recruit individuals to work for them.”

However, he warned that if “we don’t address the reality that there aren’t enough people seeking for employment, this may put another damper on the UK’s economic development,” “this might put another damper on the UK’s economic growth.”

In the present climate, recruiting skilled tradesmen such as builders, joiners, and plasterers, according to Josh Goodall, co-managing director of building business Elite Building Maintenance in West Yorkshire, is “an utter nightmare.”

“We have a few of young fellas working for us right now who are being taught up,” he added. “But you can only train so many people and you need experienced staff.”

According to the most recent job vacancy data, hotel and healthcare were among the industries with the most open positions, with construction and manufacturing following closely behind.

Mr Goodall said he was having to hike rates as a result of the tight labor market, with one experienced builder now asking for around £250 per day, up from around £150 before the epidemic.

The firm has increased its prices as a result of this, as well as the rising expenses of components like wood and cement.

“We’re virtually apologizing [to clients] by stating materials, gasoline, and garbage prices have gone up,” Mr Goodall explained.

“We think it’s a high price, but we’re making less money now than we were before.”