The Value Of Real Wages Is Still Falling
As we reported last July, the value of real wages has been falling for some time, and the latest report from the Office for National Statistics (ONS) shows that they are still falling, and have now been falling for 15 months in total.
The statistics from the ONS show that average pay in the 3 months to December 2022 increased by 5.9%, inclusive of bonuses, and by 6.7%, exclusive of bonuses. However, this has been more than offset by the increase in inflation. Inclusive of bonuses, real wages fell by 3.1%, whilst exclusive of bonuses, there was a fall in real wages of 2.5%.
The 3.1% fall in real wages, inclusive of bonuses, whilst being amongst the highest falls on record, is still well below the record fall of 4.5% recorded for the period February to April 2009, which occurred at the height of the 2007-09 great recession (caused by the collapse of the subprime mortgage market).
The ongoing decline in real wages is expected to continue for some time yet, although the rate of inflation is now starting to fall. Inflation (as measured by the Consumer Prices Index (CPI)) fell from 10.5% in December 2022, to 10.1% in January 2023, having peaked at 11.1% in October 2022.
The fall in the value of real wages has been greater amongst public sector workers, compared with those working in the private sector. Whilst pay rises have been running at 7.3% in the private sector (exclusive of bonuses), they have only been increasing by 4.2% in the public sector.
The continuing fall in the value of real wages is the main underlying cause behind much of the recent strike action in the UK. Nurses are due to strike again on the 1st - 3rd March 2023, with junior doctors participating in strikes on the 13th - 15th March 2023. Meanwhile, university staff are taking part in 18 days of strike action during February - March 2023, and teachers will be participating in strikes on the 15th - 16th March 2023. Civil servants will also strike on the 15th March 2023, as will London tube drivers. Moreover, rail workers are scheduled to take part in strikes on the 16th, 18th & 30th March, as well as the 1st April 2023.
In total, 843,000 working days were lost to strikes in December 2022, the highest since 2011, and almost 2.4 million days were lost during the second half of 2022, the highest since 1989.
Commenting upon the continuing fall in the value of real wages, the Senior Economist at the Resolution Foundation, Nye Cominetti, stated: "The labour market is sending a tentative signal to policy makers, with evidence of cooling in the jobs market and extra labour supply alongside early evidence of slowing pay growth. The fall in economic inactivity since the summer is welcome, though the accompanying rise in Zero Hours Contracts less so. And the bigger picture is a stark real wage squeeze that is prompting ever more industrial action."
Employee Engagement Continuing To Fall
As we reported in a recent article, several surveys have reported a fall in employee engagement. Now, new research conducted by Nottingham Business School (NBS) and Engage for Success (EFS) (with the assistance of the Chartered Institute of Personnel Development (CIPD)) reinforces those findings.
The new survey, which involved 800 respondents, found that employee engagement has fallen by 8% when compared with the position just prior to the Covid-19 pandemic. Moreover, at one point during the height of the pandemic, employee engagement had fallen by 11%.
Moreover, the survey found that the largest levels of disengagement occurred within those organisations who provided the least amount of assistance during the pandemic in terms of "health and wellbeing initiatives,......learning and development, communication channels and employee involvement methods."
