### Summary
Average wages in Britain rose at a rate of 7.8% annually between April and June, outpacing inflation of 6.8% in July. However, the long-term picture shows that workers are still no better off than they were four years ago, indicating the need for sustained pay rises to improve living standards.
### Facts
- 💰 Average wages in Britain rose at a rate of 7.8% annually between April and June.
- 📉 Inflation in July was 6.8%, lower than the previous month's figure of 7.9%.
- ⚠️ The long-term data shows that workers are no better off than they were four years ago.
- 🔒 The Bank of England is concerned about wage rises leading to inflation becoming entrenched in the economy.
- 📉 The UK's productivity levels have fallen behind its peers since the financial crisis.
### Additional Information
- The Bank of England and Chancellor discourage asking for higher wages, fearing a wage-price spiral.
- The current UK real average weekly earnings figure is the same as it was in May 2019 and December 2010, and no better than in March 2006.
- Sustained pay rises are needed for workers to improve their living standards.
### Summary
Real wages in most European countries have fallen due to record-high inflation, with nominal wage growth being eroded.
### Facts
- :chart_with_downwards_trend: Real hourly wages decreased in 22 out of 24 European countries between Q1 2022 and Q1 2023, primarily due to inflation exceeding nominal wage growth.
- :chart_with_upwards_trend: Belgium and the Netherlands were the only countries where real hourly wages increased during this period.
- :chart_with_downwards_trend: France, the UK, and Germany also experienced a decline in real hourly wages.
- :money_with_wings: Nominal hourly wages increased in all 24 countries, but the inflation rate was higher, causing real wages to decrease.
- :moneybag: Real wages in Europe have fallen below pre-pandemic levels in most countries, despite recent nominal wage growth.
- :chart_with_downwards_trend: Cumulative change in real hourly wages between Q4 2019 and Q4 2022 ranged from -9.6% in Estonia to 7.1% in Lithuania, with 18 out of 25 countries experiencing a decline.
- :briefcase: Workers in low-paying industries fared relatively better, with real wages performing better than in high-paying industries in many European countries.
(Note: Some bullet points have been omitted for brevity.)
Wages of job offers received by job seekers have spiked, with expectations for wages increasing by 11.8% from a year ago, indicating that inflation is impacting the labor market and fueling concerns about even higher inflation.
Core inflation in the UK may continue to remain high and volatile due to the implementation of Brexit, discrepancies in wage growth, the direct effects of Brexit on prices, and fiscal policy challenges, which could result in higher and more unpredictable inflation compared to the US and euro area.
The gap between wage growth and inflation is closing, with projections indicating that it may fully close by the fourth quarter of 2024, providing workers with the opportunity to recover from the recent surge in prices; however, wage gains across different industries vary significantly, with sectors like accommodation and food services, leisure and hospitality, and retail experiencing higher wage increases compared to education, finance, construction, and manufacturing.
Wage growth in the UK has caught up with rising prices, resulting in real pay no longer falling, according to official figures, although the unemployment rate has risen and job vacancies have fallen. The data will also impact the state pension, which is set to increase by 8.5% next April.
The UK jobless rate rises to 4.3% as unemployment increases, but wage growth surpasses inflation, with total pay rising by 8.5% and regular pay growing by 7.8% in the May-July quarter.
UK inflation is projected to average 7.2% in 2023, the highest rate among advanced economies, according to the Organisation for Economic Co-operation and Development (OECD), which also raised its forecast for UK inflation.
The retail, leisure and hospitality, and accommodation and food services industries experienced wage growth that outpaced inflation due to the high demand and staffing shortages after the pandemic, but there are no guaranteed inflation-proof industries, and it is important for individuals to focus on securing jobs that offer upward mobility and higher income to keep up with inflation.
Wage-sensitive inflation in non-housing services has been easing, while wage-insensitive inflation remains volatile and difficult to interpret, according to the Council of Economic Advisers (CEA). Housing inflation continues to be a significant contributor to excess inflation, but it is expected to gradually fall in the coming months.
Headline inflation is expected to have eased in September, while pay growth is slowing, with economists predicting that annual inflation fell slightly to 6.5% from 6.7% in August, although it still remains well above the Bank of England's 2% target, and the jobs market weakening and reducing the need for employers to increase wages.
