Earnings growth hit 7.3 per cent in the three months to May – the joint highest level on record.
According to the Office for National Statistics (ONS), public sector wages rose 5.8 per cent in the three months to May while earnings in the finance and business services sector leapt by 9 per cent.
In response, the Chancellor of the Exchequer and the Governor of the Bank of England have hinted at a need for wage restraint.
At the annual Mansion House dinner, Governor Andrew Bailey told City figures that current levels of price and wage increases were inconsistent with reducing inflation – now at 8.7 per cent.
‘More borrowing is inflationary’
Jeremy Hunt said the Government would do “what is necessary for as long as necessary” to tackle inflation persistence and bring it down to the two per cent target.
He said: “That means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary.”
Despite the rise in headline wage growth, real pay when taking inflation into account was down 0.8 per cent, the ONS data showed.
‘Real value of weekly earning is still falling’
ONS director of economic statistics, Darren Morgan, said: “Pay excluding bonuses has again risen at record levels in cash terms.
“Due to high inflation, however, the real value of weekly earnings is still falling, although now at its slowest rate since the end of 2021.”
Workers have sought pay rises to keep up with the rising cost of living and some commentators claim the Government is scapegoating wage increases as the reason for sustained inflation.
It comes after a report in June by the International Monetary Fund (IMF) which said high corporate profits have been the biggest contributor to inflation in Europe since 2021.
Response from TUC
On Twitter, the Trades Unions Congress said: “Wages are not driving inflation. This government must stop blaming workers for its failures.
“Wages are falling by 1.7 per cent. Public sector pay has fallen even faster at 3.1 per cent.
“And the Bank of England’s own data shows that any pay gains are being driven by the very HIGHEST earners.”
The data also revealed that unemployment has risen over the past quarter, with the jobless rate in the UK increasing from 3.8 per cent to 4 per cent in the three months to May.
Need financial advice? We can help.
