Record wage rise for millions & unemployment falls – what it means for you

WAGES are rising at a record rate for millions of workers as unemployment also falls.

Official figures released today by the Office for National Statistics (ONS) have revealed that basic pay is growing at its fastest rate on record.

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Growth in average total pay, including bonuses, was 6.5% and growth in regular pay, excluding bonuses, was 7.2% among employees in February to April 2023. 

The rate of UK unemployment fell to 3.8% in the three months to April from 3.9% in the previous three months, according to the ONS.

Most economists were expecting the unemployment rate to edge up to 4%.

Darren Morgan, director of economic statistics at the ONS, said: “With another rise in employment, the number of people in work overall has gone past its pre-pandemic level for the first time, setting a new record high, as have total hours worked.

“The biggest driver in recent jobs growth, meanwhile, is health and social care, followed by hospitality.

“While there has been another drop in the number of people neither working nor looking for work, which is now falling right across the age range, those outside the jobs market due to long-term sickness continues to rise, to a new record.

“In cash terms, basic pay is now growing at its fastest since current records began, apart from the period when the figures were distorted by the pandemic.

“However, even so, wage rises continue to lag behind inflation.”

However, the UK’s rate of inflation remains high at 8.7% and it’s eating into household incomes.

In real terms, adjusted for inflation, growth in total and regular pay fell on the year in February to April 2023, by 2.0% for total pay and by 1.3% for regular pay.

That means people’s pay packets have fallen in real-terms, when factoring in other living costs such as food and energy.

Chancellor of the Exchequer Jeremy Hunt said: “The number of people in work has reached a record high, and the IMF and OECD recently credited our major reforms at the Budget which will help even more back into work while growing the economy.

“But rising prices are continuing to eat into people’s pay cheques – so we must stick to our plan to halve inflation this year to boost living standards.”

Meanwhile, the number of people in jobs at an all-time high of 33.1 million, up 250,000 quarter on quarter as more Britons returned to the jobs market.

Around 2.6million people are not working due to long-term health problems, figures show.

That is up from over 2.5 million last month.

What does it mean for my money?

The main concern when workers see a “real-terms” fall in their salary is that it is not keeping pace with the cost of living.

Wage growth is still behind inflation as prices of everything from groceries to energy bills increase at a faster rate.

The average household is forking out £2,500 a year on its energy bills, for example, although this will fall from July.

Meanwhile, food prices soared by 19.1% in April, meaning everyday groceries are costing much more.

It means you will be feeling the pinch as your income doesn’t go as far and may end up struggling to pay your bills.