You might think you’ve had a pay rise, but if it’s less than 2%, your wages are actually falling.
Today it was revealed wage growth is the slowest since records began, 13 years ago, according to the Office for National Statistics.
Wages went up 0.3% between March and May compared with the same period in 2013. If you take bonuses out of the equation, wages still only went up by 0.7%.
Meanwhile, inflation reached 1.9% in June, compared with the previous year, meaning something that would have cost £100 in June 2013 costs £101.90 today.
Effectively, it means you’d need to have had a 1.9% pay rise over the year to have the same spending power than you did last year. So if you’ve noticed you’ve got less to spare than you did last year, that’s probably why.
To make it worse, our average pay has actually been falling every month since 2009.
Peter Patterson, deputy chief economist at the Office for National Statistics, said: “The striking divergence between employment and pay continues. While the employment rate has never been higher, the average weekly earnings of employees excluding bonuses have risen by only 0.7% over the past year.”
Unemployment has fallen, so why can’t we celebrate?
The government seemed pleased today at the news the unemployment figure fell to 2.12 million, or 6.5%, in March to May this year – that’s a million less than the same time last year.
Our #LongTermEconomicPlanis working. Record annual rise in employment & employment rate never been higher: progress towards full employment
— George Osborne (@George_Osborne) July 16, 2014
— UK Prime Minister (@Number10gov) July 16, 2014
However, economists have warned more jobs doesn’t necessarily mean there is a recovery.
In May 2013 UK average earnings were rising at a rate of 1.8% whereas in May 2014 they are rising at 0.3%! Recovery anyone #Realwagecrisis
— Shaun Richards (@notayesmansecon) July 16, 2014
Under 30? This graph hurts
This comes as a report from the Institute of Fiscal Studies showed people aged 22-30 have seen their incomes drop by 13% between 2007 and 2013.
This compares with a drop of only 7% for people aged 31-59, and no change at all for over 60s.
The report also noted job opportunities for under 30s were harder to come by.
“Pay, employment and incomes have all been hit hardest for those in their 20s,” Jonathan Cribb, research economist at the IFS, told the BBC.
“A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects.”
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