Inflation undermines earnings


Inflation is continuing to eat away any improvement in workers’ earnings.


In March 2018, average weekly earnings growth, including bonuses, was provisionally estimated to have risen by 2.3% against 2.6% growth in February.


Some newspaper headlines would have us believe that earnings growth has overtaken inflation and so wages have grown in real terms. However, the Office for National Statistics (ONS) uses the CPIH inflation measure in its comparison. Union negotiators, on the other hand, favour RPI inflation as the measure to use. And as retail price inflation rose by 3.3% in March and 3.6% in February, there was a real-terms cut in earnings of 1.0 percentage points in both months. 


The TUC estimates that average weekly earnings are down £25 over the 2008-18 period and its calculations used CPIH — the loss is even greater if RPI is used.


Unadjusted sectoral figures for March, published by the ONS, show that earnings growth in manufacturing was down to 1.8% from 2.2% in February. 


Growth in services was down to 2.1% from 2.7%, while in the private sector as a whole, growth was down to 2.4% from 2.6%. And it was the same story in the public sector, excluding financial services, where growth was down to 2.4% from 2.6%.

https://www.ons.gov.uk/economy/inflationandpriceindices

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours

https://www.tuc.org.uk/news/workers-are-not-getting-fair-pay-rises-says-tuc