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Real wages fall 1.2% in December as pay lags behind inflation

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Wage growth in the UK struggled to keep up with increasing inflation between October and December 2021, according to the latest Office for National Statistics (ONS) data.

Average weekly pay packets across Britain fell in December by negative 1.2%, reflecting how wages are struggling to keep up with the rising cost of living.

And while regular wages, excluding bonuses, increased by 3.6% between October and December 2021, when adjusted for inflation regular pay actually fell on the year at negative 0.8%.

Recent labour market data has shown how wage rises are struggling to keep pace with spiralling inflation.

“These figures confirm working people still face a fragile recovery in the face of a growing cost of living crisis and spiralling inflation,” said Pat McFadden MP, Labour’s Shadow Chief Secretary to the Treasury.

Britain’s cost of living squeeze has seen a surge in prices across the board led by higher household bills but also including rising petrol, energy, and food costs.

Other figures released by the data authority show that between October and December 2021, employment was 75.5%, while unemployment was 4.1%, and economic inactivity was 21.2%.

“Bold action is needed to go for growth, with steps to address skills and labour shortages,” said Matthew Percival, director for people and skills at the Confederation of British Industry (CBI). “Replacing the apprenticeship levy with a Skills Challenge Fund and creating a new independent Council for Future Skills to optimise policy towards avoiding shortages in the future are important first steps.”

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