> In real terms (adjusted for inflation), total and regular pay have shown minimal growth in September to November 2021, at 0.4% for total pay and 0.0% for regular pay; single-month growth in real average weekly earnings for November 2021 fell on the year for the first time since July 2020, at negative 0.9% for total pay and negative 1.0% for regular pay.
There’s a reason the ONS’ headline wage growth is the 3M/year and not the single month – because the latter is ‘noisy’ and is more sensitive to revision.
The best synopsis is that real wage growth has stalled, and is likely to turn negative in the coming months as inflation continues to creep higher.
To what extent wages will grow is an open question – the labour market is extremely tight (record numbers of vacancies + very low unemployment). It’s also worth noting that many businesses do pay reviews in December, or closer to the financial year end (March). Furthermore, pay reviews rarely anticipate future inflation, rather they look back on how the cost of living has changed over the past year.
To be sure, I’d still expect (smoothed) real wage growth to turn negative in the first half of 2022, potentially even in the December 2021 data when we get it, but it’s worth bearing two points in mind
– cumulative real wage growth over the past 2 years will remain positive since we had low inflation but high wage growth in 2020. In particular, in Nov 2021 Average Weekly Earnings were up 8.9% since Jan 2020 whilst cumulative inflation rose 5.4%, so real wage growth is around 3.5% since the start of the pandemic.
– Despite today’s disappointing news, the picture in the UK as far as wage growth is concerned still looks much better than in most other major economies; real wage growth has been negative for a several months in Germany, France, Italy, etc… and deeply negative in the US. This is a phenomenon everywhere and its due to the rapid surge in inflation that almost no country is immune to.
2 comments
Yeah, sucks. Got 3% pay rise.. Inflation is something like 6%..
Cool, cool cool.
Ugh, please can we get the Guardian banned. There’s no reason to use an unreliable journal when the statistics agency posts their own [digestible summary](https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/latest) of the data.
> In real terms (adjusted for inflation), total and regular pay have shown minimal growth in September to November 2021, at 0.4% for total pay and 0.0% for regular pay; single-month growth in real average weekly earnings for November 2021 fell on the year for the first time since July 2020, at negative 0.9% for total pay and negative 1.0% for regular pay.
There’s a reason the ONS’ headline wage growth is the 3M/year and not the single month – because the latter is ‘noisy’ and is more sensitive to revision.
The best synopsis is that real wage growth has stalled, and is likely to turn negative in the coming months as inflation continues to creep higher.
To what extent wages will grow is an open question – the labour market is extremely tight (record numbers of vacancies + very low unemployment). It’s also worth noting that many businesses do pay reviews in December, or closer to the financial year end (March). Furthermore, pay reviews rarely anticipate future inflation, rather they look back on how the cost of living has changed over the past year.
To be sure, I’d still expect (smoothed) real wage growth to turn negative in the first half of 2022, potentially even in the December 2021 data when we get it, but it’s worth bearing two points in mind
– cumulative real wage growth over the past 2 years will remain positive since we had low inflation but high wage growth in 2020. In particular, in Nov 2021 Average Weekly Earnings were up 8.9% since Jan 2020 whilst cumulative inflation rose 5.4%, so real wage growth is around 3.5% since the start of the pandemic.
– Despite today’s disappointing news, the picture in the UK as far as wage growth is concerned still looks much better than in most other major economies; real wage growth has been negative for a several months in Germany, France, Italy, etc… and deeply negative in the US. This is a phenomenon everywhere and its due to the rapid surge in inflation that almost no country is immune to.