Majority of UK workers expect pay to fall behind cost of living

·3-min read
Unions are calling for pay increases as UK employees face a cost of living crisis and the worst pay squeeze for more than 200 years. Photo: Getty
Unions are calling for pay increases as UK employees face a cost of living crisis and the worst pay squeeze for more than 200 years. Photo: Getty

Nearly two-thirds of workers expect their pay to go up by less than the cost of living, according to a new poll published by the Trades Union Congress on Thursday.

The poll of over 2,000 working people in England and Wales found that 63% do not expect their wages to rise in line with their living costs.

These expectations are likely to worsen as Britain's cost of living crisis will see energy bills increase by 54% in April and inflation is expected to peak at 7.25% in the same month.

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Currently, just one in 10 workers (11%) are expecting a pay rise that will exceed their living costs, while nearly three out of every 10 (29%) do not expect their pay to rise at all this year.

As a result, unions are calling for pay increases for employees who are suffering the worst pay squeeze for more than 200 years, according to the TUC.

TUC general secretary Frances O’Grady said: “Everyone who works for a living ought to earn a decent living.

“Britain needs a pay rise – not more pay restraint.

“The government must urgently work with unions and employers to help families get through this cost of living crisis."

She added: “The best way to give people long-term financial security is to get wages rising across the economy.”

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Average wages in 2022 are worth less than they were in 2008, in real terms.

Nominal pay in the private sector fell by 0.6% between October and November – from 4.7 to 4.1%, while real pay fell by 1.4% in the year to November.

Meanwhile, real pay in public sector slumped by 2.4%

Back in December 2021, the Treasury warned that if workers in both the public and private sectors demanded higher wages, this would simply lead to higher levels of inflation which would harm growth, and only exacerbate cost of living pressures.

This is because wage increases could mean higher prices and interest rates.

However, TUC general secretary O'Grady has refuted this claim.

She said: “Let’s be crystal clear. Energy prices are pushing up inflation – not wage demands.

“The last thing hard-pressed households need right now is for their pay to be held down.”

Britain's Chancellor of the Exchequer Rishi Sunak supports the Treasury's view that higher wages would lead to more inflation. Photo: Getty
Britain's Chancellor of the Exchequer Rishi Sunak supports the Treasury's view that higher wages would lead to more inflation. Photo: Getty

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An analysis of Bank of England figures by the Trades Union Congress (TUC) published on Friday 4 February found that real wages in the UK are set to fall by £50 a month on average this year.

However, it's not just energy prices which are facing a price hike, national insurance is also set to increase by 1.25 percentage points and petrol prices are currently up by more than 25% in the past year.

The Institute of Fiscal Studies has also predicted that council tax will go up close to the maximum that the government permits.

TUC's head of economics Kate Bell added: “Calls for pay restraint are ill-founded and will make the squeeze on family budgets even tighter.

“Britain needs a pay rise — not another decade of lost pay and living standards."

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