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Employment

Real wages have fallen by £68 a month since last year

But the boss of the Bank of England has told workers to “think and reflect” before asking for a pay rise.

Real wages have fallen by £68 a month since last year, new labour market figures have revealed.

Workers’ pay, excluding bonuses, fell by 1.9 per cent in the year to March 2022 – the sharpest drop since 2013.

The stark figures come a day after Bank of England chief Andrew Bailey told workers to “think and reflect” about asking for pay rises. Bailey, who earns £575,000 a year, warned salary hikes could make inflation worse.

It is the UK’s highest earners who have seen the biggest pay rises – with finance workers earning 25 per cent more in March 2022 than in December 2019, and soaring bonuses meaning overall pay rose by 1.4 per cent when adjusted for inflation.

The disparity has prompted warnings over who exactly has benefitted from the pandemic.

The TUC’s analysis of the figures showed the squeeze has been particularly acute for those in the public sector, who have seen real wages fall by £131 a month compared to a year ago.

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Frances O’Grady, TUC general secretary, said: “Millions are at breaking point as real wages plummet and bills soar.”

“The government is missing in action at the worst possible time,” Grady said, calling for an emergency budget and a windfall tax on oil and gas.

She added: “We need a proper boost to Universal Credit and the minimum wage to get money back into people’s pockets, and to inject much-needed demand into our economy.”

Chancellor Rishi Sunak said the statistics showed fewer people were out of work than feared, and that tax cuts and changes to universal credit meant people kept more of their money.

Bet the Resolution Foundation thinktank warned the true extent of the squeeze in real wages is likely to be worse than the statistics give away – as the effects of furlough are still taken into account.

Hannah Slaughter, senior economist at the Resolution Foundation, said: “The UK labour market continues to tighten, with the number of unemployed people having fallen below the number of job vacancies for the first time ever. People are taking advantage of these conditions to move jobs, and employers are responding by paying bonuses to hire or retain key staff.

“But for the vast majority of the workforce, the labour market may feel far less hot. There is little sign of wider pay pressures building and real wages are getting squeezed even tighter.

“With inflation having shot up in recent months, the scale of Britain’s wage squeeze is going to get far worse.”

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