Public sector pay still lags behind private sector as wage inflation builds

Pay continues to be squeezed in real terms, when adjusting for inflation.

It is down 1.2% - including bonuses - in latest three months.

We are still getting poorer, on average.

But in cash or nominal terms, it is still rising at rates deemed inflationary by the Bank of England - or by 7.3% excluding bonuses.

So there is no chance the Bank will pause the current cycle of interest rate rises.

Here is the latest data from the Office for National Statistics (ONS) - note the strength of earnings growth in finance and manufacturing.

And note too that public sector pay is rising faster than at any time in 22 years - 5.8% - but is still lagging private-sector pay, which increased 7.7%.

The ONS said: "March to May 2023, average regular pay growth for the private sector was 7.7%, this is the largest growth rate seen outside of the pandemic period [which was anomalous]; for the public sector this was 5.8%, a larger growth rate was last seen in September to November 2001 (5.9%).

"The finance and business services sector saw the largest regular growth rate at 9.0%, followed by the manufacturing sector at 7.8%; this is the highest regular growth rate we have seen for the manufacturing sector since comparable records began in 2001."

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...