UK real wages fall the most in a century

According to a research that was released on Thursday by the Trades Union Congress (TUC), it is possible that pay raises in Britain may lag behind inflation by about 8% by the end of this year. If this occurs, it will be the largest decline in real earnings in 100 years.

 

Given the central bank’s prediction that inflation would jump to 13% in the fourth quarter of 2022 while wages were to increase by just 5.25%, the report claims that living standards in the country are expected to fall by an unprecedented 7.75%. This is due to the fact that the central bank predicted that inflation would jump to 13% in the fourth quarter of 2022.

 

The Trades Union Congress (TUC) made the observation that employees’ earnings had not experienced such a severe and sustained decrease in relation to inflation since the 1920s. The warning issued by the union congress was that “This is not a wage-price spiral, it is a real pay calamity.”

 

After being modest during the fall and winter at around 5.25 percent, it is anticipated that pay increases will only account for twenty percent of inflation.

 

According to the findings of the research, the combination of wage hikes that were approximately one percentage point above the pre-Covid pandemic level of 4% and inflation that was in the double digits amounted to “the greatest decrease in exactly a century.”

 

“Only once before has real pay decreased by a greater percentage, and that was during the fourth quarter of 1922, when the pay and price inflation that had occurred after the first world war swung abruptly into reverse. According to the TUC, the only other comparable statistic was 7.2%, which was recorded during the first quarter of 1940.

 

According to official estimates, the rate of growth in overall average pay has slowed to 6.2% over the course of the past two months.

 

Frances O’Grady, general secretary of the TUC, believes that the government has a responsibility to bring the economy “back in balance again.”