Record Fall In Real Wages
Further to our recent article, the latest statistics from the Office for National Statistics (ONS) show that the value of real wages is continuing to fall, with the latest fall in real wages representing a record.
The statistics from the ONS show that average pay in the 3 months to May 2022 increased by 6.2%, inclusive of bonuses, and by 4.3%, exclusive of bonuses. However, this has been more than offset by the increase in inflation. Inclusive of bonuses, real wages fell by 0.9%, whilst exclusive of bonuses, there was a record fall in real wages of 2.8%.
This was the fifth month in a row in which there has been a fall in the real value of regular pay (i.e. pay exclusive of bonuses).
The ongoing decline in real wages is expected to continue throughout the rest of the year, as inflation continues to rise. As measured by the Consumer Prices Index (CPI), inflation increased again in the 12 months to June 2022, reaching 9.4%. This is up 0.3% from the 9.1% registered in May 2022. The latest increase in inflation was in large part due to a 9.3% increase in the price of petrol and diesel. The 9.4% rate is the highest level inflation has reached since February 1982
With Cornwall Insight forecasting that the energy price cap is likely to increase from its current level of £1,971.00, to £3,244.00 in October 2022, the chief UK economist at Capital Economics, Paul Dales, is predicting that inflation will hit 12% in October 2022. He states: "We still think inflation will rise to 12% in October and that interest rates will be raised from 1.25% to 3%, although it’s finely balanced whether they rise by 25bps or 50bps in August."
Commenting on the latest real wages statistics, the Senior Economist at the Resolution Foundation, Nye Cominetti, stated: "People are feeling the effects of the cost of living crisis in their pay packets rather than their job security. Despite healthy wage growth in the private sector, near double digit inflation means that their real-terms value is falling at a record rate. But while everyone is experiencing pay packet pain, the jobs market at least remains resilient with unemployment close to a record low, inactivity falling and employment rising."
Return To Full-Time Office Working: 18-24 Year Olds The Most Reluctant
According to new research from the ADP® Research Institute, entitled 'People at Work 2022: A Global Workforce View' (which involved interviewing 32,924 respondents), 18-24 year olds are the group which are most resistant to returning to full-time office working. 71% of this group stated that they would consider seeking alternative employment if they were compelled to do so. 66% of 25-34 year olds took the same view. The proportion amongst older workers, however was less - 56% for 45-54 year olds, and 59% amongst the over 55's. The average overall amongst all respondents was 64%.
Commenting upon the findings, Rahul Goyal from ADP, states: "Lockdowns have been eased and raise the question of whether workers can be asked or compelled to return to work. For many, this could be a deciding factor in their decision to leave. These findings contradict some people's beliefs that younger people are desperate to return to the workforce for social and career advancement reasons."
Goyal adds: "It is important for young people to be surrounded by peers and superiors to learn and gain experience and create networks early on in their careers and they need to find new ways to encourage them back to an in-person environment, engage them once there and help rebuild lost confidence and skills."
