Most workers facing real terms pay cut as inflation predicted to soar

man paying bills

Responding to the Labour market overview March 2022 released by the Office for National Statistics, Ben Harrison, Director of the Work Foundation, said:

“This quarter, the UK labour market recovery has continued with a small increase to 75.6% in employment and unemployment decreasing to 3.9%. Omicron has not halted the recovery, but workers and job seekers are facing serious challenges as wages continue to fall behind inflation and economic inactivity hits 21.3% despite record vacancies of 1.3 million.

“Most workers are facing a real terms pay cut as while regular wage growth (without bonuses) stands at 3.8%, the Bank of England is predicting that inflation will peak at 7.25% in April. Rising prices and the energy cap increase in April will affect all households across the UK, but it will acutely impact those in low paying and insecure employment.

“To provide security as the cost of living and global uncertainty hit households, the Chancellor has the opportunity at the Spring Statement to harness the ambition and zeal that he demonstrated in March 2020 when he introduced the furlough scheme to protect income and living standards. At a minimum, the Government should provide targeted support to those most at risk by uprating Universal Credit to the predicted levels of inflation rather than the 3.1% currently planned in April.”

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