Fall in the value of “real wages”
Real wages saw a sharp fall in the last quarter, despite the continuing tightening of the labour market, official figures have shown. The latest Labour Force Survey from the Office for National Statistics (ONS) found that the unemployment rate between January and March fell 0.3 percentage points compared to the previous quarter to 3.7%.
At the same time, job vacancies between February and April increased to another record of 1,295,000, meaning that for the first time since records began there were fewer unemployed people in the UK than vacancies.
Despite this, real wages continued to fall. Between January to March, average total pay excluding bonuses increased by 4.2% which, when adjusted for inflation, was equivalent to a 1.2% fall.
Businesses are struggling to meet a perceived moral obligation to alleviate the squeeze on their workforce. Where pay increases are not possible, employers are looking at other measures they can take to improve financial wellbeing; such as improving flexible working options to reduce travel costs. This financial situation is likely to sustain for longer than employers would wish and it may become difficult to offset financial misery with employer benefits in the long term.
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