Wages are failing to keep up with inflation despite record employment levels, ONS figures reveal

Wages are rising slower than inflation, Office for National Statistics figures show. Picture: ANTONY

Wages are rising slower than inflation, Office for National Statistics figures show. Picture: ANTONY KELLY - Credit: Archant

Pay is failing to keep pace with the rising cost of living despite employment reaching a new record high, according to new figures.

The Office for National Statistics' labour market figures recorded a fall in average earnings, which grew by 2.1% in the year to April, down by 0.2% on the previous month.

The fall was greater when measured over a three month period, confirming wages are falling behind the 2.9% inflation rate.

Controversy over 'insecure' jobs, such as zero-hours contracts and work in the 'gig' economy, has helped thrust the issue of low pay into the spotlight.

Maike Currie, investment director for personal investing at Fidelity International, said a 'lethal cocktail' of soaring inflation, low interest rates and negative real earnings was brewing for UK consumers. 'Rising inflation and weak wage growth means UK real earnings is falling at the fastest pace in three years. The wages we are earning is not nearly keeping up with the price of goods and services we consume, tightening the squeeze on UK household finances.'

She added that UK households 'are likely to face a challenging time' as further inflation rises put a tighter squeeze on incomes.

TUC general secretary Frances O'Grady said continued slow wage growth could put the country 'in the middle of another cost of living crisis'.

In the East of England 3.04 million people are in work, while the unemployment rate has dropped by 0.3% to 4.1% – below the national average of 4.6%.

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Nationally, the ONS figures showed almost 32 million people are in work, 372,000 more than a year ago and the highest total since records began in 1971.

Unemployment is at its lowest level for more than a decade after falling by 50,000 in the quarter to April to 1.53 million.

The number of people classed as economically inactive fell by 30,000 to 8.8 million, the joint lowest level on record at 21.5%.

Other data showed a continued rise in the number of people on the so-called claimant count, up for the third month in a row in May to 802,600.

In East Anglia there were 19,590 people claiming jobseeker's allowance and universal credit last month. The number of young claimants (aged 18-24) was down 4% month-on-month at 4,360.

Across Norfolk, where the total claimant count was 9,765, every local authority saw a month-on-month fall in May except Waveney, where it increased slightly.

Paul Gisbey, district operations leader for East Anglia at the Department for Work and Pensions, said the ratio of full time to part time employment was shifting, with more full time vacancies now being advertised.

'At the moment it seems the economy and earnings are picking up,' he said.

'If full time work is dominating the new jobs coming in, we should see the weekly earnings start to move up.

'The number of people who are available and what employers need to pay to attract and retain people will drive the changes.'

He added that the number of vacancies in the region remained high, with particularly high demand for workers in the hospitality, retail, care and logistics sectors, including seasonal staff.

Director of employment and skills at the CBI Neil Carberry said decent employment market growth was an 'encouraging feature of the UK economy', but that weak pay growth was hitting people's pay packets and living standards.

He added: 'In the longer term, we must fix the foundations of our economy by improving productivity growth through meaningful progress on a modern industrial strategy, with real change on the ground in skills, infrastructure and innovation.'

Matt Hughes, senior statistician at the ONS, said: 'Many labour market indicators remain strong, with the employment rate at a joint record high and the inactivity rate at a joint record low.

'On the other hand, with wage growth continuing to slow and inflation still rising, real pay is down on the year.'

New work and pensions secretary David Gauke said: 'This government wants to give everyone the opportunity to succeed, regardless of where they live or their background.'