Total pay falls by 03 in real terms

first_imgTotal pay for employees in Great Britain, including bonuses, fell by 0.3% in real terms between June to August 2016 and June to August 2017, according to research by the Office for National Statistics (ONS).Its UK labour market: October 2017 report also found that regular pay, excluding bonus payments, fell by 0.4% in real terms, which have been adjusted for consumer price inflation, between June to August 2016 and June to August 2017.In nominal terms, that is not adjusted for consumer price inflation, total pay increased by 2.2% between June to August 2016 and June to August 2017, which is the same growth rate as between May to July 2016 and May to July 2017. Regular pay, in nominal terms, increased by 2.1% over this same time period.Average total pay, including bonuses, was £507 a week in nominal terms before tax and other deductions from pay for employees in Great Britain in August 2017. This compares to £496 a week in August 2016. Average regular pay, excluding bonuses, was £476 a week for British employees in August 2017 before tax and other deductions from pay. This compares to £466 a week in August 2016.In real terms, average total pay for employees in Great Britain was £488 a week in August 2017, before tax and other deductions from pay. Average regular pay in real terms, excluding bonus payments, was £459 a week in August 2017, before tax and other deductions from pay.Average total pay for employees in Great Britain, in nominal terms, increased by 34.7% between January 2005 and August 2017, rising from £376 a week to £507 a week. Over the same time period, the Consumer Prices Index, including owner occupiers’ housing costs (CPIH), increased by 32.8%.Ian Brinkley, acting chief economist at the Chartered Institute for Personnel and Development (CIPD), said: “The latest figures again show the subdued pay outlook across the economy, with a 2.2% increase continuing to lag behind inflation. With no end in sight to this squeeze on living standards, many [employees] will be facing a Christmas period where they will once again be required to tighten their belts. There is little to suggest that wages are responding to low unemployment and higher inflation.”Mariano Mamertino, Europe, Middle East and Africa (EMEA) economist at Indeed, added: “Ordinarily employers would ramp up salaries in order to compete in the war for talent, but such anaemic wage growth figures show this just isn’t happening. With the gap between wage and price rises steadily turning into a gulf, [even] more [employees] are seeing their living standards steadily eroded. With consumer prices now rising at 3% a year, real wages are set to fall faster and harder. The resulting pain for [employees] will soon translate into reduced consumer spending and could morph into a serious threat for the economy. While Britain’s unemployment success story means more people are in work than ever before, it is increasingly looking like a distraction from the clear and present danger posed by falling real wages.”Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Unemployment might be at a record low, but the UK has a sticky problem with wage growth. This can be in large part attributed to the three Ps; productivity, public sector pay, and pensions. UK productivity growth is low, which means employers aren’t seeing the same output gains from [employees] they once did, meanwhile public sector pay has been capped in order to keep government borrowing in check. At the same time the roll out of the government’s automatic enrolment programme has seen employers forced to pay into a pension for their staff, which has no doubt diverted some money that would otherwise have flowed into pay packets.”last_img