Real-terms wages have fallen by the biggest amount of any single month for more than a decade, new figures show. Analysis by the Learning and Work Institute shows regular pay, after inflation, fell by 1.9 per cent in March 2022 alone.
Jonathan Ashworth, Labour's shadow work and pensions secretary, reacted by saying: "The Tory economic approach is failing. Workers deserve fair pay rises and a plan from government to tackle the cost of living crisis."
The figures come from the Office for National Statistics' latest labour market data. They show the average weekly wage in the UK in March was £615 including bonuses, or £558 excluding bonuses.
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That means total average pay (including bonuses) is up seven per cent on last year. Excluding bonuses, pay is up 4.2 per cent on last year.
Bonuses also tend to be enjoyed by people on higher salaries. The largest bonus payments are seen in the financial and business services sector.
Depending on which measure you choose, inflation is between 6.2 and nine per cent. That means the cost of living is, as the Learning and Work Institute pointed out, increasing faster than wages, and real-terms wages are therefore falling.
Ashworth continued: “Real wages have now fallen to almost £300 lower than they were 15 years ago. Alongside a decade of the Conservatives’ failure to grow the economy, their punishing tax rises, surging inflation, and real terms cut to support mean people across the country are facing a cost of living tsunami.
“By refusing to take action on the cost of living through an emergency budget, Rishi Sunak has shown once again the Tories simply aren't on the side of working people."
Economists are worried that inflation could rise yet further over the course of this year. Andrew Bailey, the governor of the Bank of England, said this week that people should "reflect" on whether to ask for a pay rise.
"I do think people, particularly people who are on higher earnings, should think and reflect on asking for high wage increases," he told the Treasury select committee. "It’s a societal question.
"I’m not preaching about this. I was asked if I’ve taken a pay rise myself this year and I said no, I’ve asked the Bank not to give me one."
Bailey, who earns £575,000 per year, added: "I felt that was the right thing for me personally. But everyone must make their own judgment on that. It’s not for me to go round telling people what to do."
Sharon Graham, the general secretary of the Unite union hit back by asking: "Why is it that every time there is a crisis, rich men ask ordinary people to pay for it? Inflation has not been caused by workers and they certainly don’t need lectures from the governor of the Bank of England on exercising pay restraint.
"Enough is enough, we will be demanding that employers who can pay, do pay. Let’s be clear: pay restraint is nothing more than a call for a national pay cut."
The government was keen to focus on the positives in the latest labour market data. Only 3.7 per cent of working-age people are now unemployed, a record low and below pre-pandemic levels.
And 1.3 million more disabled people are in work now than in 2017. Chloe Smith, the Conservative MP and minister for disabled people, health, and work, said: "This is an important milestone showing our commitment to supporting disabled people to lead independent lives and reach their full potential."
The employment rate also dropped, however, mainly driven by middle-aged and older people becoming "economically inactive", meaning those out of work and not seeking work. This most commonly refers to students, unpaid carers, the long-term sick and disabled, and people retiring early.
