Workers suffer biggest drop in real pay since 2013 as wages fail to keep up with inflation

Price rises are coming from all directions, as Sarah Corker reports

UK workers have suffered the biggest fall in their real pay for nearly nine years as the cost-of-living squeeze tightened, according to official figures.

The Office for National Statistics (ONS) said regular pay excluding bonuses tumbled 1.8% in the three months to February when taking soaring inflation into account as measured by the Consumer Prices Index (CPI) – the steepest fall since August to October 2013.

In February alone, real regular wages dropped 2.1% which was the biggest drop since August 2013, the ONS added.

While pay rose 4% in the quarter, it was far outstripped by inflation and experts have warned wages will lag even further behind rising prices this year as inflation is expected to rocket in the autumn.

The latest ONS labour market data also revealed another rise in the number of UK workers on payrolls, up by 35,000 between February and March to 29.6 million.

But this was the smallest monthly increase since February last year while vacancies also saw the smallest rise since February to April 2021, up 50,200 at a record 1.29 million in January to March.

Darren Morgan, director of economic statistics at the ONS, said: “Overall, employment in December-February was little changed on the previous three months, and so is still below its pre-pandemic level.

“While unemployment has fallen again, we are still seeing rising numbers of people disengaging from the labour market, and as they aren’t working or looking for work, are not counted as unemployed.

“Early estimates suggest there was only a small increase in the number of employees on payroll in March, while job vacancies, although again at a record high, rose at their slowest for nearly a year.

“While strong bonuses continue to mitigate the effects of rising prices on people’s total earnings, basic pay is now falling noticeably in real terms.”

The figures come amid forecasts that inflation will peak at nearly 9% this autumn, with official data on Wednesday set to show another steep rise in the CPI.

The latest data from the ONS marks the calm before the storm, ahead of April’s energy cap rise, council tax bills increase and the national insurance contribution rise.

The UK’s economic forecasters, the Office for Budget Responsibility (OBR), recently warned that households will suffer the biggest fall in real incomes since records began in 1956, with a drop of more than 2.2% this year.