MILLLIONS of workers are facing a cut to pay in real terms as inflation outpaces wage growth.
New figures released today show that wages in “real terms” fell by a record 3%, meaning less money in people’s pockets.
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It is the biggest fall since records began in 2001.
Data from the Office of National Statistics (ONS) reveals pay, not including bonuses, grew by 4.7%, in the three months to June.
But when taking into account inflation, pay fell by 3%.
That’s because inflation has reached 9.4%, with essentials like food and fuel among the costs rising.
When inflation is rising at a rate faster than wages, it means that your money doesn’t stretch as far.
Darren Morgan, ONS director of economic statistics, said: “The value of real pay continues to fall.
“Excluding bonuses, it is still dropping faster than at any time since comparable records began in 2001.”
The number of UK workers on payrolls rose by nearly 73,000 between June and July to 29.7 million.
But the number of job vacancies fell by 19,800 between May and July to 1,274,400. It is the first quarterly fall since June to August 2020.
However, Darren added that the number of job vacancies are still at “historically high” levels.
Employment stood at 75.5%, for those aged between 16 and 64 and unemployment for the same category was 3.8%.
Mr Morgan added: “The number of people in work grew in the second quarter of 2022, whilst the headline rates of unemployment and of people neither working nor looking for a job were little changed.
“Meanwhile, the total number of hours worked each week appears to have stabilised very slightly below pre-pandemic levels.
“Redundancies are still at very low levels.”
What do the latest figures mean for my money?
Kate Smith, head of pensions at Aegon, said millions of people are walking a “financial tightrope” and face tough decisions ahead.
She added: “In the middle of an ever tightening cost of living of crisis, this means a pay cut for millions of workers as households are forced to walk a financial tightrope with everyday essentials such as food and fuel rising exponentially in cost.
“This will undoubtedly force many working-age individuals into a corner as they are forced to make difficult day-to-day decisions about how to stretch their finances to cover everyday expenses.”
The Bank of England has warned the inflation could reach 13% this year.
Inflation is a measure of how the price of goods and services have changed over the past year.
The ONS will release fresh figures on Wednesday (August 17) revealing how fast prices are rising.
There are also fears the UK economy could be heading for a winter recession as the economic is crippled by the cost of living crisis.
The most recent Gross Domestic Product (GDP) data showed the economy shrunk by 0.5% in June, according to ONS figures.
It comes as pub and restaurants warn they may have to close their doors this winter due to soaring energy bills.
A tight labour market where employment is high and there are lots of job vacancies means it’s a good time to find a new job.
In some areas, such as retailing, hotels and construction, a lack of staff has pushed up wages by 7.7% – although this is still below inflation.
But millions of households are still struggling with the cost of living crisis.
Energy prices, fuel and food are are among the essentials which have rocketed.
Chancellor Nadhim Zahawi said: “Today’s stats demonstrate that the jobs market is in a strong position, with unemployment lower than at almost any point in the past 40 years – good news in what I know are difficult times for people.”
What help can I get?
The latest figures will be bad news for people struggling during the cost of living crisis, especially with predictions the energy price cap is set to rise this winter, pushing bills up to £5,000 next year.
But there is support on offer for those in need.
The government announced a giant cost of living support package in May and some households could be in line for up to £1,200.
The first instalment of the £650 cost of living payment has already started hitting people’s bank accounts.
And there are a number of other payments available including a £150 disability payment, a £400 energy bill discount and a £300 pensioner cost of living payment.
There’s also help on offer in the form of the Household Support Fund and the £150 Council Tax Rebate.
