WAGES are on the rise for millions of workers across the UK.
Official figures released today by the Office for National Statistics (ONS) have revealed that basic pay is still growing at its fastest rate on record.
Growth in employees' average total pay, which included bonuses, was 6.9% and growth in regular pay, excluding bonuses, was 7.3% in the three months from March to May.
It's the second consecutive month wages have risen at a record rate.
Last month the ONS revealed growth in total pay was 6.5% and growth in regular pay was 7.2% in the three months from February to April.
The fresh figures are good news for households who are battling rising costs due to high inflation.
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The UK's current rate of inflation remains high at 8.7%.
When pay doesn't rise at the same rate as inflation, it leaves people worse of in real terms - wages don't stretch as far because prices are higher.
After taking inflation into account, average pay including bonuses fell by 1.2% in the year to March to May 2023, or 0.8% excluding bonuses.
That means people's pay packets have fallen in real-terms, when factoring in other living costs such as food and energy. But it's a smaller fall than in previous months.
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Pay in the private sector was up 7.7% and higher than the public sector which grew 5.8%.
Darren Morgan, director of economic statistics at the ONS, said: "Pay excluding bonuses has again risen at record levels in cash terms.
"Due to high inflation, however, the real value of weekly earnings are still falling, although now at its slowest rate since the end of 2021.”
But rising wages have been blamed for keeping inflation stubbornly high, resulting in rate hikes by the Bank of England (BoE) which have pushed up borrowing costs for millions of households.
BoE boss Andrew Bailey and Chancellor Jeremy Hunt yesterday called for pay restraint to tackle inflation.
Bailey said yesterday in a speech to finance chiefs: "Both price and wage increases at current rates are not consistent with the inflation target."
The central bank has a target to keep inflation at 2%. Hiking interest rates is a way of trying to reach this target.
Lifting interest rates is meant to encourage people to save, rather than spend, which in theory should help bring high inflation under control.
Chancellor Jeremy Hunt said: “Our jobs market is strong with unemployment low by historical standards.
“But we still have around one million job vacancies, pushing up inflation even further.
“Our labour market reforms – including expanding free childcare next year – will help to build the high-wage, high-growth, low-inflation economy we all want to see.”
Meanwhile, the unemployment rate for March to May increased by 0.2 percentage points on the quarter to 4% from 3.8%.
According to the ONS, this increase was driven by people unemployed for up to 12 months.
Most economists had predicted the rate would stick at 3.8% for the latest quarter.
There were 1,034,000 million job vacancies on average across April to June - down 85,000 on the previous three months.
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.
Official food inflation figures slipped from 19.1% to 18.4% in May, this just means prices are still rising - but at a slower rate.
Prices are still considerably higher than they were at the start of 2022, with bread and butter more than 20% more expensive.
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.
Rising wages have been blamed for keeping inflation high though.
It means the Bank of England could hike rates again to tackle the issue.
It will next meet in August to decide on the base rate, which is currently 5% after a hike from 4.5% last month.
High-street banks use the BoE base rate to work out the interest rates it offers to customers.
A further hike means the cost of borrowing, including loans, credit cards and mortgage repayments could become more expensive.
Consecutive hikes from historic lows have piled pressure on homeowners, with more to come if they rise again.
The government has brought in more support for those struggling with higher monthly payments, including extending the term of their mortgage and moving to interest-only repayments.
What help can I get?
Extra help includes a £900 payment for millions on certain benefits including Universal Credit and a £150-£300 top-up for millions of pensioners.
The £900 has been split into three instalments of £301, £300 and £299.
Over eight million people are eligible for the help in total and should have received the first instalment last month.
The second and third instalments are due to be paid this autumn and in spring 2024.
You qualify for the payments if you receive the following benefits:
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Income Support
- Pension Credit
- Universal Credit
- Child Tax Credit
- Working Tax Credit
Meanwhile, the remaining payment is worth £150-£300 and will be made to millions of pensioners from November.
You will receive the payment if you qualify for this year's Winter Fuel Payment, which you will get if you were born before September 25, 1957.
The money is essentially a top up to the Winter Fuel Payment which is designed to cover the costs of heating over the colder months.
You will be sent a letter from the Government in October or November if you are eligible for the £150-£300 top up.
You might also be able to get help via the Household Support Fund.
The help is being distributed by councils in England and what you are entitled to varies depending on where you live.
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But, in most cases, you will be in line for support if you are on a low income or benefits.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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