Average regular pay growth for the private sector was 7.2% in September to November 2022, and 3.3% for the public sector
(Picture: PA Wire)Private sector pay rose at more than twice the rate of public sector wages, figures revealed on Tuesday, undermining the Government’s stance on strikes.
Rishi Sunak is facing the biggest wave of industrial action since the late Seventies as inflation squeezes people’s real pay. Teachers on Monday became the latest public sector workers to vote for strikes, joining nurses, ambulance workers and rail staff who are all striking over pay.
Ministers are resisting offering inflation-busting wage rises to public sector workers amid fears they could drive inflation — already at 10.7 per cent in November — even higher.
But the disparity between workers in the private sector and those in the public sector is adding to the pressure on ministers to offer more generous settlements to end the disputes.
Figures from the Office for National Statistics showed that private sector pay rose by 7.2 per cent in the three months between September and November, while wages in the public sector increased by just 3.3 per cent.
Growth in average regular pay — which excludes bonuses — was 6.4 per cent, the strongest growth rate outside the pandemic period when wages were given a boost as millions of workers returned from furlough.
But with inflation still squeezing people’s pay, the ONS said total and regular pay both fell by 2.6 per cent — slightly smaller than the record fall in real regular pay in April to June 2022 (three per cent) but still among the largest falls in growth since comparable records began in 2001.
Although the latest inflation data — due to be published on Wednesday — is expected to show another monthly fall for December, economists expect it to still be over 10 per cent, continuing the strain on household budgets.
ONS director of economic statistics Darren Morgan said: “The real value of people’s pay continues to fall, with prices still rising faster than earnings. This remains amongst the fastest drops in regular earnings since records began.”
Ben Harrison, director of the Work Foundation think-tank at Lancaster University, said: “Today’s figures underline why we are seeing such a level of discontent amongst public sector workers, and why many continue to be concerned regarding the economic outlook for 2023.
“It’s vital that ministers recognise the pressures facing public sector workers and urgently resolve pay disputes so that yet more days are not lost to strike action.”
The number of working days lost to strikes also rose again in November to 467,000. Mr Morgan said the period since June has now seen more days lost than in any six months for over 30 years.
Despite the real terms squeeze on pay, the overall growth in wages could make further interest rate rises by the Bank of England more likely. The Bank raised the base rate to 3.5 per cent in December and may look to hike rates further next month.
Ashley Webb, from Capital Economics, said: “Consistent with the economy proving to be more resilient than expected, November’s labour market data show that conditions remain tight and wage growth stayed strong. This will only add further weight to the case for the Bank of England to raise interest rates from 3.5 per cent now, perhaps to 4.5 per cent in the coming months.”
The ONS also said the unemployment rate for September to November 2022 increased by 0.2 percentage points on the quarter to 3.7 per cent.
In the latest three-month period, the number of people unemployed for up to six months increased, driven by those aged 16 to 24 years. Those unemployed for over six and up to 12 months also rose.
But Chancellor Jeremy Hunt said: “Even in the face of global economic challenges, the UK labour market remains resilient with a record number of employees on payrolls.”
However Jonathan Ashworth, Labour’s shadow work and pensions secretary, said: “Real wages are plummeting, almost two and a half million people are out of work because of sickness and far too many people aren’t getting the support they need to either stay in work or to go back to work.”
